Why Some of the World’s Most Livable Cities Are Becoming Unaffordable to Locals

Every year a major business publication produces a ranked list of the world’s most livable cities, and every year the same handful of names finish at the top. Copenhagen, Vienna, Zurich, Melbourne, Geneva, Sydney, Vancouver, Osaka, Auckland, Adelaide — the order shuffles, but the core list barely moves. The 2025 Economist Intelligence Unit index put Copenhagen at the top with a near-perfect 98.0. What the rankings don’t say is that “most livable” has quietly drifted to mean “most livable for those who can afford it.” The same cities anchoring the top of livability indices also sit near the top of the world’s housing unaffordability rankings, and the people the cities were originally famous for nurturing are slowly being priced out.

The Forces Behind the Squeeze

Five drivers show up repeatedly in housing-economics research on why the most desirable cities became the least affordable:

• Restrictive zoning prevents density increases in the neighborhoods most people actually want to live in, with greenbelts and growth boundaries amplifying the constraint.
• Foreign and institutional capital treats premium urban real estate as a financial asset class, decoupling prices from local incomes entirely.
• Short-term rental platforms shifted millions of units out of long-term rental markets into nightly tourist supply.
• Income growth has chronically lagged housing price growth for two decades across nearly every developed-market city in the livability top 30.
• Construction costs have risen sharply since 2020, with land assembly, permitting, and labor all producing project pipelines that price out anything below the luxury tier.

The combined effect is a system where the cities most attractive to capital are precisely the ones least attractive to the workers who keep them running.

The Parallel Shift in How Cities Earn Their Living

While local real estate prices have been climbing, an entirely different economy has been forming on top of urban centers — one that no longer requires being in the city to participate in. Remote work pulled millions of jobs out of office districts. E-commerce moved retail away from high streets. Streaming services and online platforms now host a significant share of the entertainment, gaming, and leisure activities that used to happen in restaurants, theaters, and venues that paid local rent. Operators in that digital tier — a streaming service, a remote-first software firm, an online gambling platform like the hitnspin casino online — sit outside the local commercial real estate market entirely, paying server costs in foreign data centers rather than ground-floor rents on expensive boulevards. The decoupling is part of why expensive cities feel emptier of their old commercial vitality even as residential prices keep climbing; the activity tied to those addresses has migrated to a layer that doesn’t need the address.

The Numbers in 2025

The 2025 Demographia International Housing Affordability survey, which compares median home prices to median household incomes, shows the scale of the disconnect more clearly than any qualitative description can.

A median multiple above 5 is considered “severely unaffordable” by the survey. Most of the top-ten livable cities sit at 7 or above. The EIU itself acknowledged the tension in its 2025 report, noting that “livability remains under pressure amid geopolitical tensions, civil unrest and widespread housing crises.”

Why Vienna Looks Different

The exception that proves the rule is Vienna, which finished tied for second on the 2025 livability index and consistently ranks among the most affordable major Western European capitals. Roughly 60% of Vienna’s residents live in either city-owned social housing or limited-profit housing cooperatives, with another large share renting privately under tenant protections. About 40% of the entire housing stock is social housing, 90% of people qualify for it, and new limited-profit rents average 27% below private market rates. A 2019 zoning rule requires two-thirds of new developments above a certain size to be subsidized housing. The system isn’t accidental; it descends from the “Red Vienna” municipal building program of the 1920s, which produced over 64,000 units in fifteen years. Vienna’s lesson is uncomfortable for cities that prefer market-led solutions: durable affordability requires durable public commitment to building it.

What Cities Are Actually Trying

The policy responses now in motion fall into three broad categories: building more (Auckland’s upzoning, Tokyo’s permissive permitting), regulating short-term rentals more aggressively (Barcelona, Amsterdam, parts of New York), and expanding social or non-market housing on the Vienna model (Berlin’s recent referendum on expropriating large landlords, Singapore’s HDB system). None has yet reversed the trend for any of the top-ten livable cities. The honest reading is that “most livable” rankings will keep going to cities where ordinary residents can’t afford to live, until those cities decide affordability is a livability criterion worth scoring as heavily as the metro system or the public parks.