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World urbanization creates huge demand for new housing, conference hears

A construction worker builds iron reinforcement column at a highrise building construction site in Indonesia’s capital Jakarta, where the property market has experienced 100-per-cent growth in the last five years.

Photograph by: ROMEO GACAD
, AFP/Getty Images

The urbanization of the world’s population and the shift toward smaller households have created an unprecedented demand for new housing in urban markets, the International Women’s Forum World Leadership Conference heard Friday in Vancouver.

The speed and scale of the transformation from rural to urban societies in emerging countries now overwhelms anything that has ever happened before, said McKinsey Global Institute principal Jaana Remes.

She noted it took 150 years for the United Kingdom to double the incomes of about 10 million people as they moved from the country to the city.

“We have 100 times that scale in China today,” Remes said. “We have a billion people doubling their income and it’s happening in one tenth of the time.”

She said because of smaller households today, the demand for new housing units in emerging markets is growing 2.7 times faster than the population.

Asian property markets have “gone mad” in the past five years — with the Beijing market rising 200 per cent and Jakarta experiencing 100-per-cent growth, said Neil Jensen, who heads Asian operations for London-based estate agent Fraser and Company.

“Governments and regulators aren’t just pouring cold water on the market — they’re pouring ice on it but it doesn’t matter at the moment,” he said, noting Chinese interest rates recently rose to 15 per cent and the maximum mortgage on a property there is 40 per cent of a property’s value.

Remes said it makes sense in many markets to build very large numbers of new housing units to cut costs and to develop those units close to schools, health facilities and workplaces. She said housing developer Tata Housing of India has done a good job of building affordable housing by using land close to industrial parks, where there are lots of jobs.

Remes noted a single company in Mexico can build 60,000 units a year with the help of federal funding.

Gordon Harris, an urban planner leading the development of the UniverCity sustainable community at Simon Fraser University, said Canada needs to build more livable, affordable, sustainable communities for its aging population. He said within five years, one in four Canadians will be 65 or older.

“We want to stay in communities where everything is within easy walking distance and where public transit is highly accessible,” Harris said. “Once you can’t drive anymore, you’re a prisoner in your own community (if you live in a typical suburb).”

Former Vancouver city manager Judy Rogers said many Vancouver home buyers don’t own cars, which is why it makes sense to focus future housing developments along transit lines. She also said 33 per cent of Vancouver buyers are first-time buyers.

Jensen said he’s concerned that future generations of home buyers won’t have the financial skills necessary to buy a home because most schools don’t teach basic information about property and mortgages.

“I learned from my parents because they had a home and a mortgage, but if your parents don’t have those opportunities and the school isn’t teaching them, then nothing will improve,” he said. “I don’t know why we’re not providing basic education about this right around the world.”

A construction worker builds iron reinforcement column at a highrise building construction site in Indonesia’s capital Jakarta, where the property market has experienced 100-per-cent growth in the last five years.

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