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Western housing shortages do not just prevent many from ever affording their own home. They also drive inequality, climate change, low productivity growth, obesity, and even falling fertility rates.

Try listing every problem the Western world has at the moment. Along with Covid, you might include slow growth, climate change, poor health, financial instability, economic inequality, and falling fertility. These longer-term trends contribute to a sense of malaise that many of us feel about our societies. They may seem loosely related, but there is one big thing that makes them all worse. That thing is a shortage of housing: too few homes being built where people want to live. And if we fix those shortages, we will help to solve many of the other, seemingly unrelated problems that we face as well. [...]

The price of housing does not just affect the places where people live; it determines the kinds of homes they live in as well. And that has a huge influence on people's family lives, affecting both when people have kids and how many kids they have.

The more expensive an extra bedroom is, the more expensive it is to have more (or any) children. Expensive housing can force people to wait before having kids and move out of city cores and into cheaper suburbs when they do. This means losing many of the amenities and social life benefits of city life, adding a long commute to their day, and probably reducing their number of job options.

Across the developed world, the number of children that women actually have is well below the number they say they would like to have. According to one recent study, after controlling for other factors, a 10% rise in house prices was associated with a 1.3% fall in overall births. Put together with the huge rises in housing costs we've seen over the past four decades, this implies a massive reduction in births across the Western world. One report estimated that rises in the cost of UK housing between 1996 and 2014 may have led to 157,000 fewer children being born in that period alone.

Combine these effects with the fact that higher incomes allow people to have more kids because they can more easily afford things like childcare, and housing costs may be causing dramatically fewer children to be born than people would like to have. There is also a fiscal cost to this, of course, but it is fundamentally a personal, human one: fewer brothers and sisters, less time spent with grandparents, and less of the meaning that children bring to their parents' lives.

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