Renovate vs New Build – Which Is the Greener Housing Solution?

Is the world facing a housing crisis, meaning a shortage of homes relative to the number of families and individuals who need them, or is it primarily a housing affordability crisis?

Many experts and international agencies argue that the latter is the real issue. House prices have become increasingly unaffordable for millions of people, even in countries with a housing stock.

Around the world, nations are grappling not only with an insufficient housing supply but also with a lack of affordable, adequate homes.

According to the United Nations’ urban development agency, approximately 2.8 billion people—around 40% of the global population—lack access to adequate housing and basic sanitation. This issue is especially severe in the Asia-Pacific and Africa, where over 1 billion people reside in informal settlements.

Moreover, the problem of housing affordability is no longer limited to low- and middle-income countries; it is increasingly impacting wealthier economies as well.

Housing affordability across developed economies

A Guardian report highlights several countries struggling with housing affordability, largely because house prices have failed to keep pace with income growth and population growth. These countries include New Zealand, Japan, Austria, the Netherlands, and the United States.

In New Zealand, house prices began rising sharply in the 1980s, increasing from roughly twice the average income to around nine times that level, significantly higher than in neighbouring Australia. Japan, once home to the world’s most expensive residential property market, has made notable progress by increasing the supply of smaller, more affordable one-bedroom flats, particularly in Tokyo.

Austria presents a different model. A housing tax of approximately 1% of income helps fund municipally owned housing that offers low rents to lower-income households. These communal buildings often outperform private developments, providing shared green spaces, playgrounds, and community facilities.

By contrast, the Netherlands has seen median house prices rise to more than ten times median income, alongside steep rent increases. According to The Guardian, government policies have stimulated demand without sufficiently addressing supply. Housing scholars point to rising inequality, shortages of affordable homes, and the growing influence of foreign investors as consequences of decades of ineffective housing policy.

In the United States, housing affordability challenges are particularly noticeable in states like Colorado, where home prices have surged sixfold over the past 30 years. This issue has been worsened by a shortage of supply, as older residents are staying in their homes longer, property investment is increasing, and younger generations are entering the housing market.

To address these challenges, state policies now mandate zoning changes that allow higher-density housing near transportation hubs and permit the construction of accessory dwelling units alongside single-family homes.

Renovation as a climate-friendly housing solution

An article in Forbes argues that renovating existing housing stock may be a more effective solution to affordability challenges than building new homes. Renovation not only helps preserve housing supply but also carries significant climate benefits.

High inflation, rising material costs, labour shortages, and bureaucratic delays all contribute to the limited construction of new affordable housing. In the United States, for example, data from the National Low Income Housing Coalition shows that there are only 35 affordable homes for every 100 extremely low-income renter households.

Renovating older homes can help bridge this gap while avoiding the substantial carbon emissions associated with new construction. Buildings and construction materials account for an estimated 60–80% of embodied carbon emissions.

Analysis by the Carbon Risk Real Estate Monitor of 36 global retrofit projects found that refurbishing existing buildings can avoid 80–97% of embodied carbon emissions, largely because most materials are already in place. Renovation also reduces demolition waste, lowers energy use, and improves building resilience in the face of climate change.

When renovation makes sense and when it does not

A growing number of organisations are embracing renovation-led housing strategies. In the United States, Hudson Valley Property Group has preserved more than 17,000 homes across 92 communities, maintaining affordability while reducing environmental impact. Around 67% of residents in these properties spend less than 30% of their income on rent.

Renovation is not always the most environmentally friendly option. According to Cornerpin guidance, new construction may be warranted in certain situations, such as when existing buildings require significant repairs that are close to the embodied carbon cost of new construction.

It may also be justified when electricity grids have a high carbon intensity or when older buildings cannot be modified to meet accessibility, safety, or climate resilience requirements. Additionally, new developments may be more advantageous when they substantially increase housing density in well-connected, low-carbon areas.

Ultimately, the global housing crisis is less about a shortage of physical buildings and more about affordability, accessibility, and sustainability.

Renovating existing housing stock, when done thoughtfully, offers a powerful opportunity to address rising costs while reducing emissions. If cities treated existing buildings as climate assets rather than liabilities, housing challenges could become catalysts for economic, social, and environmental progress.