The gain will be supported by increasing rural-to-urban migration and rising populations in the Asia/Pacific and Africa/Mideast regions and increasing demand for multifamily units in urban centers, rising income levels in many developing countries in the Asia/Pacific and Africa/Mideast regions.
Ongoing efforts by governments to boost the supply of social housing to reduce the population living in substandard, informal dwellings is also another contributing factor, according to the report.
However, new housing construction will be limited by low growth in North America and Western Europe resulting from high construction costs, rising mortgage interest rates, long lead times for construction projects due to labor shortages, and weak population gains.
According to the report, the other factor will be declines in China, the world's largest housing market stemming from population loss, defaults by large building developers, and efforts by the government to stabilize the housing market and prevent a housing bubble.
“Countries around the world dealt with high levels of inflation and rising mortgage interest rates throughout the course of 2022, which increased the cost of home purchases for all buyers, using lending to finance their purchases,” the report says.
“High mortgage rates and other economic uncertainty such as that caused by the Russia-Ukraine war are holding down housing markets in many areas as potential purchasers delay investments while they wait for conditions to stabilize.”
The report says; “While the reduced movement of people and closed economies halted construction and home sales in many areas, it also boosted purchases of larger, single-family homes away from urban centers as those who could look to remove themselves from crowded areas”.
As the pandemic winds down and government and corporate policies moderate, new multifamily housing construction will outpace that of single-family housing.
Multifamily housing is often more affordable, particularly for those in crowded areas who need access to public transportation, according to the report.
In addition, longer-term trends continue to support the market, including ongoing migration to urban centers from rural areas in developing nations such as India, Brazil, and Nigeria government efforts to reduce the number of people living in inadequate housing
“Rising interest rates and high home prices make single-family dwellings unaffordable, especially in countries where potential buyers commonly rely on financing to back their purchases,” it says.
Single-family dwellings accounted for 63 percent of the global housing stock in 2021 and are the most prevalent type of housing in rural areas.
As such, areas in which a larger share of the population is rural - such as many parts of the Asia/Pacific and Africa/Mideast regions - see high proportions of single-family housing.
Industrialized countries with low population densities per square kilometer such as Australia, Canada, and the US, also tend to have larger shares of single-family dwellings, as lower population densities generally make the land less expensive and more readily available, even in urban areas.
By contrast, both Western and Eastern Europe have high proportions of multifamily dwellings, the report notes.
In Western Europe, population densities are generally higher than in Australia, Canada, and the US despite generally similar levels of affluence, and multifamily units house many people with only limited use of relatively expensive land.
In Eastern Europe, centralized construction policies resulted in a large stock of multifamily dwellings, many of which were built in the first decade after the end of the Second World War.
“Multifamily units are generally more affordable, especially in the rental market, which has also led to increasing demand,” the report says.
However, the single-family housing market will remain larger.
Informal Housing
In spite of generally higher incomes in urban areas, the quality of urban housing can vary widely as in developing countries, economic opportunities in urban settings have encouraged migration from rural to urban areas - a process that has generated demand for new housing.
A lack of land tenure laws and other property rights has contributed to the use of informal housing, or urban slum dwellings, to satisfy that housing demand, especially in countries with large low-income urban populations.
Most high-income countries, on the other hand, have very small portions of their population living in slums or other improvised housing.
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