Urban decay and the premature obsolescence of housing: A cross‐country examination of the basic economic determinants

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Abstract
Urban decay and the premature obsolescence of housing remain important problems in even the wealthiest countries. Many analysts maintain that the market allocation of housing and the attendant spatial class segregation in the housing market are strongly related to both phenomena. The analysis carried out in this paper, however, suggests that socio‐economic segregation in housing is a minor explanation at best. Substandard housing seems overwhelmingly a manifestation of the failure by governments to sufficiently subsidize the production of, and support the demand for, housing of a good standard. Countries such as Sweden that have effected the requisite resource transfers have enjoyed considerable success in eliminating substandard housing. Neither urban decay nor the premature obsolescence of housing seem caused in any meaningful sense by market failure.

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