The Future of Housing Isn't on Land, It's Above it
November 18, 2024
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By 2050, 68% of the world’s population is expected to live in urban areas. As of 2024, around 82.4% of the U.S. population and 75% of Europe’s population are projected to reside in cities. With rising prices and limited land availability, owning property or an apartment has become a major challenge. In the UK, for example, approximately 60 million acres of land exist, yet 1% of the population about 600 large institutions and the Crown owns nearly all of it. Similarly, the U.S. has around 2.3 billion acres, but much of it is inaccessible for development. This increasing scarcity of land is why vertical, rather than horizontal, development is often prioritized. But what’s really driving this land scarcity?
What Factors Drive Land Scarcity?
- Urban development
As urban areas expand, the demand for space intensifies, leading to the rapid consumption of land for infrastructure, housing, and commercial purposes. Urban planning plays a critical role in managing this limited land by designing efficient transportation networks, optimizing space usage, and ensuring safety and convenience. However, the challenge remains in balancing growth with the need for sustainable and livable environments.
- Population Growth
Population growth, along with an increasing proportion of individuals in the productive age group, significantly drives the demand for housing, jobs, and essential services. As the working age population expands, more people migrate to urban areas in search of better opportunities, which increases pressure on available land. This growing demand for residential, commercial, and industrial spaces intensifies competition, leading to higher land prices. Consequently, the scarcity of land becomes more pronounced, making it more difficult to meet the needs of a rapidly expanding population.
- Government Restrictions
Government restrictions on land use are often implemented to control industrial development and reduce pollution. Certain areas may be restricted from construction, which limits available land and contributes to scarcity. As a result, land prices can rise, making it harder to secure land for development
- Investment Decisions
Investors often acquire land not with the immediate intention to build, but rather to hold and monitor its appreciation over time. This approach, known as land banking, is common among those who see land as a secure asset with the potential for long term value growth. As demand for land increases and supply remains limited, the value of these holdings can rise significantly, leading to further scarcity.
Solutions to Land Scarcity in Terms of Housing Crisis
Upzoning and Relaxing Zoning Laws
Governments can change zoning laws to allow for higher density developments in areas where housing demand is high. This includes increasing the maximum allowable building heights, allowing mixed use projects, or reducing restrictions on multi family housing. This related with air rights and SkyTrade help to enable air rights and allow efficient development of vertical spaces.
High Density Housing
Developing multi story buildings, such as apartments and condominiums, can help accommodate more people on limited land. High density housing reduces urban sprawl and makes efficient use of available land. This related with air rights and SkyTrade help to enable air rights and allow efficient development of vertical spaces.
Redevelopment
Repurposing vacant buildings or underused land within urban areas can provide housing solutions without encroaching on undeveloped land. This can involve transforming abandoned buildings, old factories, or other brownfield sites into residential properties.
Solutions in Real World Implementation
Vienna’s social housing model is a successful example of affordable high density housing, where roughly 60% of residents live in subsidized housing due to public ownership of land and rent controls. The city builds mixed income, high density developments, integrating people from various income levels and reducing stigma. Emphasizing high quality design, these buildings include amenities like gardens and playgrounds, which improve livability and foster community pride. Long term planning, sustainable construction, and rent regulation keep these developments affordable while enhancing quality of life. Vienna’s approach demonstrates how careful policy and public investment can create high density, affordable housing without compromising on comfort or livability.
In 2021, California introduced SB 9 and SB 10 to stimulate upzoning as a response to the state’s housing shortage. SB 9 allows single family lots to hold up to four housing units, while SB 10 provides local governments with the authority to rezone areas near public transportation for up to ten units. These policies are designed to promote denser housing options, address housing scarcity, and reduce environmental impact.
Conclusion
As urban populations grow and available land diminishes, the demand for housing and space continues to intensify, leading to land scarcity and rising property prices. Key drivers include urban expansion, population growth, government restrictions, and investment behaviors. To address this, cities worldwide are adopting strategies such as upzoning, high density housing, and redevelopment of underused areas. Real world implementations, like Vienna’s social housing and California’s SB 9 and SB 10, demonstrate how upzoning laws and high density housing can increase housing availability, promote affordability, and reduce urban sprawl.
These strategies often hinge on securing air rights, which allow property developers to build vertically rather than horizontally, maximizing limited land resources. This is where platforms like SkyTrade come into play, facilitating the trading and management of air rights to support vertical development. By enabling efficient transfer and use of air rights, SkyTrade helps cities and developers unlock vertical spaces, making it an essential tool in adapting to the challenges of land scarcity in urban centers.
