How Lisbon and other world cities are tackling the affordable housing crisis

As a result of low public investment levels and the absence of strong public policies in the last decade, housing prices between 2012 and 2022 have increased by 120% in the Portuguese capital. Rental prices have also increased significantly, reaching more than 30% in the past five years. At the same time, income levels have remained relatively steady, thus hurting the purchasing power of the local population.

Since 2021, Lisbon has adopted an innovative multi-dimensional approach, putting short-term solutions and long-term investments in place. An €800-million public investment plan backs the strategy for 2022-2028, the largest in 30 years. In less than two years, this new vision has already shown results:

This multi-pronged, holistic strategy is re-establishing affordable living conditions in Lisbon for locals, allowing younger generations to stay in the city centre.

As the global housing crisis presents significant social and economic challenges, cities must develop collaborative approaches to tackle current and future housing shortages. Local conditions must be considered; however, key principles can provide some guidelines.

The public, private and civil society sectors must develop a common vision for addressing the housing shortage. Establishing shared goals will provide a foundation for cooperation and help align critical efforts.

For example, in the United Kingdom, the not-for-profit National Housing Federation is working with the government to address barriers to building new homes for sale, rent and affordable home ownership.

By creating supportive policy frameworks, national and local governments can incentivize private sector participation in affordable housing projects. Tax incentives, streamlined permitting processes and zoning changes are particularly effective in encouraging the development of affordable housing.

The YIMBY (“Yes In My Backyard”) movement in the United States advocates for increasing housing supply through changes in zoning regulations and development policies. In California, YIMBY has contributed to ending exclusionary and single-unit zoning, enabling 2.2 million homes to be built in the state.

As a joint effort between governments and private companies to develop and manage housing projects, these partnerships can leverage the strengths of both sectors – combining public resources and planning capacity with private innovation and efficiency.

In Toronto, the Daniels Corporation partnered with the housing authority to redevelop neglected social housing into a mixed-use, mixed-income community that guarantees all residents the right to return.

Working with citizens to design inclusive and sustainable urban solutions has become a key piece of the puzzle. Mobilizing collective intelligence helps make more conscious decisions, adapt projects to the population’s needs and promote a “community spirit” among locals.

Cities such as Paris, Lisbon or Brussels now have permanent citizen assemblies to support decision-makers in solving not just the housing shortage but also other challenges, such as mobility, healthcare or education.

The private sector is keen on providing innovative techniques, materials and technologies to increase the efficiency, affordability and sustainability of housing construction. Governments can support these efforts by fostering a regulatory environment that encourages the adoption of new solutions.

For instance, Estonian engineering firm Kodasema is working with the government to develop modular KODA houses that can be set up in a day.

When it comes to solving the global housing crisis, one size does not fit all. Looking at different approaches worldwide, it becomes clear that there is neither a miraculous solution nor a definitive answer.

Solving the housing shortage demands a consistent, diversified, customized approach with different policies for different cases. Having recently been awarded by the European Commission with the European Capital of Innovation prize, Lisbon is set to demonstrate the success of its innovative multi-solution approach and is determined to inspire other cities around the globe.