As demand for affordable housing continues to mount in many cities around the world, rising urban sprawl – driven by developments on low-cost land on the periphery – is increasing dangerous greenhouse gas emissions and forcing residents to travel further for jobs and amenities.

Many national governments are faced with a policy challenge: How to boost the supply of affordable, good quality housing while also delivering compact urban centres with excellent transport links and access to green space.

This new research provides national governments with a range of tools to boost supplies of affordable urban housing for those on lower-incomes, while also creating compact, clean, connected cities. While each urban context is unique, by adopting the right fiscal incentives – such as a development tax to internalise the real cost of sprawl, or a property tax to incentivise more efficient use of land for housing – national governments have the opportunity to nurture inclusive, sustainable cities of the future.

Ani Dasgupta, Global Co-Director at the Coalition for Urban Transitions

Published in partnership with the Organisation for Economic Co-operation and Development (OECD), Housing Policies for Sustainable and Inclusive Cities uses evidence from cities in high- and middle-income countries, to analyse the pros and cons of a range of national government housing policies. It finds that often policies designed to address problems in one area (e.g. house prices) create unanticipated trade-offs in another (e.g. sprawl).

The research is one of the key contributions to the whole-of-OECD project on housing started in 2019. It recognises the difficult trade-offs governments face and identifies three key interventions that can simultaneously reduce housing costs and nurture vibrant, sustainable urban neighbourhoods.

Angel Gurría, Secretary-General of the OECD

The report offers key principles that national governments should apply and gives three policy recommendations to create more productive, inclusive and sustainable cities:

1. Design fiscal incentives to foster compact and inclusive cities – such as redesigning land and property taxes to incentivise efficient land use through higher-density housing development.
2. Unlock the potential of the rental market – for example, by establishing clear and balanced tenant–landlord regulations to enhance transparency.
3. Build coherent policy frameworks – by crafting national urban policies that align different ministries and levels of government behind a shared vision for cities.

Read the paper