Financialization in 13 cities - an international comparative report

The report “Financialization in 13 cities – an international comparative report” is a collaborative research project led by the London School of Economics (LSE) Geography and Environment department. It was authored by Christine Whitehead, Kath Scanlon, Michael Voigtländer, Jacob Karlsson, Fanny Blanc and Martina Rotolo and published in April 2023. The study analyses how financialisation—the increasing role of finance in housing markets—affects affordability, home‑ownership, rental security and urban patterns across 13 major cities in Europe, North America, Asia‑Pacific and the Middle East.

Thirteen cities were selected to represent diverse housing systems: Miami, London, Vancouver, Hong Kong, Auckland, Sydney, Singapore, Barcelona, Lisbon, Copenhagen, Berlin, Dublin and Stockholm. The authors combined literature review, statistical analysis of house‑price, rent and home‑ownership trends, and in‑depth expert interviews. Data were drawn from national statistics, mortgage and rental market indicators, and case‑study “city cameos” that provide qualitative context for each location.

Across the sample, housing affordability has deteriorated. In Hong Kong the price‑to‑income ratio reached 22.8 in 2021, the highest globally. European cities such as Barcelona and Lisbon show rent‑to‑income ratios above 30 % for many households, while Berlin’s rent index has risen sharply despite low starting levels. In North‑American cities, Vancouver and Miami exhibit sustained price growth, with Vancouver’s median house price increasing by over 30 % between 2020 and 2021. Owner‑occupation rates vary widely, from 91 % in Singapore to 17 % in Berlin, illustrating divergent market structures.

Four main drivers are identified: (1) institutional and foreign investment, especially in cities with open capital markets (e.g., USA, Canada, Spain, Portugal); (2) the perception of housing as a financial asset, reinforced by low‑interest‑rate environments and mortgage‑backed securities; (3) growth of short‑term lettings (Airbnb and similar platforms) that remove units from long‑term rental stock; and (4) deregulation of finance and housing markets since the 1980s, which broadened access to mortgage credit and enabled large‑scale Build‑to‑Rent developments. The report highlights the role of hedge funds such as Blackstone in Copenhagen and the impact of “renoviction” practices in Berlin and Stockholm.

Regulatory environments differ markedly. Group 1 cities (e.g., Miami, London, Vancouver) have open investment markets and limited rent control, leading to higher price volatility. Group 2 (Auckland, Sydney, Singapore) combines national restrictions on foreign purchases with relatively liberal private‑rental sectors. Group 3 (Barcelona, Lisbon) historically encouraged overseas investment through Golden‑Visa schemes, now being phased out. Group 4 (Copenhagen, Berlin, Dublin, Stockholm) features stronger tenant security, rent‑stabilisation mechanisms and, in some cases, restrictions on foreign ownership. Anti‑financialisation policies include foreign‑buyer taxes, vacancy levies, caps on short‑term rentals, and tighter rent‑increase limits after renovations.

The authors argue that sustainable housing requires coordinated action on both supply and demand. Tight planning regulations and land scarcity exacerbate price pressures, while financial‑driven investment can channel capital into energy‑efficient retrofits and new Build‑to‑Rent projects that meet climate goals. However, without safeguards, such investments risk displacing low‑income residents and increasing carbon footprints through higher turnover. The report recommends: (i) expanding affordable and mixed‑tenure construction, (ii) implementing transparent ownership registers to curb speculative holdings, (iii) calibrating tax incentives to favour long‑term, socially responsible landlords, and (iv) aligning mortgage‑market prudential rules with housing‑affordability objectives.

For a pan‑European audience focused on sustainability, the study underscores that financialisation is a cross‑city phenomenon with common challenges: rising unaffordability, reduced home‑ownership, rental insecurity and uneven urban development. While institutional capital can support climate‑resilient housing upgrades, policy frameworks must balance investment incentives with strong tenant protections, transparent ownership data, and robust planning to ensure that housing remains a human right rather than solely a financial asset.