Housing shortages – what works and what doesn’t  

View from the Basel exhibition tower of a city that has fallen out of favour with investors. Keystone

As living space becomes scarce and prices soar, calls for government intervention grow louder. But which measures truly make a difference? Seven examples from Basel to Singapore.  

Last December, officials from 10 European metropolises sounded the alarm in an open letter to the EU calling on policymakers to make housing a priority.  

The EU Commission responded by pledging to draft a plan for affordable living space and even appointed an EU Commissioner for Housing. 

On a larger scale, this move reflected what the city of Zurich has been going through locally. Last year, Switzerland‘s economic hub had already appointed a “housing delegate” to tackle the crisis in a city where just 0.7% of all apartments are currently vacant. 

These examples show that policymakers are aware of the problem but do they have a solution? In fact, not all interventions in the housing market have been successful. Here are seven examples, and the lessons they offer. 

Basel – the risks and side effects of rent control 

In Basel, a commission determines whether a rent increase is permissible. Keystone / Georgios Kefalas

In the city of Basel, a housing protection commission determines rental prices after renovations, extensions or new replacement buildings, a system the local population approved in a 2021 referendum. 

This government control is meant to stop rents from shooting up after renovation works. However, there have been some side effects as lower expected returns have apparently deterred investors.   

An analysis by the consulting firm Wuest PartnerExternal link shows that applications for new buildings and extensions have dropped significantly since the vote, unlike the general trend across comparable Swiss cities. 

It is no surprise that rent caps discourage people from renovating or converting their homes, a pattern also seen in Paris and Berlin. 

In Berlin, the rent cap has pushed many rented apartments onto the market before the Federal Constitutional Court declared the regulations invalid. In Paris, a black market for unofficially rented apartments has emerged. 

Barcelona – mysterious vacancies in the south of Europe  

In Barcelona, people are demonstrating against mass tourism. However, part of the housing shortage is home-made. EPA

In tourist hotspots like Barcelona, heated discussions continue over the impact holiday apartments have on rents. What’s often overlooked is that far more apartments are simply kept vacant.  

The much-criticised holiday rental platform Airbnb also laments this fact and cites figures from Spain’s statistical office showing that “the number of vacant apartments in Barcelona is almost eight times higher than the number of holiday flats”.  

This phenomenon is not unique to Barcelona. Lisbon, Paris and Athens also have far more vacant apartments standing than being rented out to tourists. 

The reasons for this vary. Some owners lack the cash to renovate while others co-own inherited properties and have not yet agreed on how to divide or use them. 

But regulations also play a key role. An article in the German business publication HandelsblattExternal link quotes Juan Velayos who lectures at Madrid’s IE Business School. He thinks the reason for Barcelona’s vacancies lies in the new housing law which grants tenants the right to leases of at least five years. 

“Owners whose children need the apartment when they start university in three years are unlikely to rent it out in the meantime, which is absurd,” says Velayos. 

Vienna – the secret of Europe’s model city 

Strawberry moon over Vienna. The Austrian capital is Europe’s wunderkind when it comes to housing policy. APA

According to a 2024 reportExternal link by the consultancy firm Deloitte, average rents in Vienna are just a third of those in London, Paris and Dublin, a fact that cements the Austrian capital’s reputation as Europe’s housing-policy wunderkind.  

The main reason for Vienna’s unique position is public and publicly subsidised housing. More than half of the city’s population lives in municipal or cooperative housing which keeps them off the open market.  

This was made possible by a long-term land policy. When the Habsburg monarchy ended in 1918, many imperial estates were handed over to the republic, and some to the city of Vienna. 

Unlike many other municipalities, Vienna did not privatise its land. In fact, quite the opposite was the case. The city systematically expanded its holdings through pre-emption rights and a land fund established in the 1980s. 

That said, the Vienna model is not without faults. The approximately 40% of apartments on the private market are experiencing a price spiral like that seen in other European cities.  

Singapore – where home ownership is the norm 

In Singapore, the state controls the majority of residential construction. Copyright 2025 The Associated Press. All Rights Reserved

The housing market in Singapore is a global exception. More than 70% of all homes are government-built condominiums that were developed under the housing programme of the Southeast Asian city state. Official figures show that more than 80% of the population live in these apartments.  

In practice this is an almost complete nationalisation of housing which is administered by the Housing & Development BoardExternal link. This approach was made possible by massive state land acquisitions from the 1960s onwards which also saw expropriations and purchases well below the market value.  

The state keeps indefinite control over Singapore’s land, which technically means that the apartments are not sold but leased to residents for a period of 99 years. 

Critics accuse the Singaporean government of bending housing policies to serve its pro-family agenda. Married couples, for instance, are given priority in the housing application process.  

The rising resale market for these apartments has also come under fire. In prime central districts, prices have shot up putting them out of reach for the younger generation. 

Tokyo – densification and deregulation 

No gap remains unutilised in Tokyo. By increasing density, the city has been able to offset some of the housing pressure. Keystone

Since the 1960s, Tokyo has pursued a policy of high-density development to meet housing demands. Building regulations have been relaxed several times, and new maximum building heights have been established. 

The 2002 Act on Facilitation of Reconstruction of Condominiums is regarded as a significant regulatory step. It lowers the minimum share of owners required to approve demolition and reconstruction and allows for higher density in replacement constructions.  

Compared with other countries, buildings in Tokyo have a relatively short life span. A studyExternal link published earlier this year by the real estate firm Housing Japan found that steel-reinforced buildings last 47 years on average while wooden structures last around 21 years.  

Due to densification, Tokyo has been able to absorb massive growth over the last few decades, mainly via the private market. Social and non-profit housing remains scarce, and property prices as well as rents in prime locations have recently soared. .

Munich – a toolkit for capturing property gains  

Munich has made the absorption of revaluation gains more flexible. Keystone / Laurent Gillieron

Significant value gains arise from zoning and upzoning land. In many countries, it has long been common practice to claim a share of these gains to fund essential infrastructure such as schools.  

Land value capture is often combined with quotas for social housing. In Switzerland, the city of Bern has such a rule in place. In the US, cities like New York, Boston and Washington D.C. apply similar policies known as “inclusionary zoning” and “inclusionary housing”. 

An interesting approach comes from the German city of Munich which faces a serious housing crisis. In 2021, it expanded its Socially Just Land Use and made it more flexible with a modular system that gives investors various choices.  

Vancouver – Canada and the belated purchase ban 

For years, foreign investors have bought up properties in Vancouver without using them. In the meantime, a “foreign buyer ban” applies to the whole of Canada. EPA

For years, Vancouver saw increasing amounts of foreign capital flow into its real estate market. Investors from China and the Middle East especially snapped up centrally located property, often only as investments. Many of these apartments remained empty, while home ownership became increasingly unaffordable for the middle class.  

About ten years ago, critical voices grew too loud for Vancouver to ignore. In 2016, the city introduced a tax on foreign house buyersExternal link and later added a tax on empty homes. 

And in 2023, the federal government responded by implementing a “foreign buyer ban” for the entire country, albeit with some exceptions.  

Switzerland introduced a similar purchase ban in 1985, known as Lex Koller, which serves as an example that such measures can work. While housing shortages remain a big problem in city centres, compared with places like London where districts like Kensington see many empty apartments, Zurich and Geneva have very few vacancies. 

What are the lessons learnt? 

Housing prices cannot be sustainably controlled by introducing rent caps and eviction protection in the private sector. 

Either loopholes emerge, or capital is redirected to more lucrative sectors which slows down construction and triggers a new housing crisis. 

If policymakers impose limitation on the private sector, they must step in and take charge of housing construction. But that requires land, something many big cities simply do not have. 

In a rule of law system, real progress is only possible in combination with a capital-intensive land policy pursued over decades. 

Alternatively, the government could make home construction easier and allow higher housing density which would boost new and replacement developments. This not only sparks urban planning conflicts but also raises questions of distribution.   

A common global practice is to channel parts of the added value back to the public by requiring cities to demand that a share of new apartments to be set aside as social housing in higher-density developments. 

A downside of this policy is the emergence of parallel markets that do not affect each other’s prices. If the public sector takes too big a share of the value, it can slow private construction. A consensus between policymakers and the building industry is crucial. 

Purchase bans for foreign investors without a residence permit are an effective and widely popular way to prevent vacancies in internationally sought-after locations. 

Edited by Balz Rigendinger. Adapted from German by Billi Bierling/ac