What causes gentrification?

A rise in the population results in an increased demand for housing, which means that there is an ever-increasing demand for more land. However, land is a limited factor, and it is not possible to create 'new' housing areas for the population, and so it is only practical that the old ones be 'recycled'. Thus, the theory of a rise in the population tries to explain why a newer class comes into an existing urban area and ends up displacing many of the former residents.

Not only are immigrants from all over the country, but also from all over the world. This increases the property rates in the existing premium urban areas of the city which makes it impossible for the middle-class to afford housing there. Thus, more and more people turn to the existing poorer areas which were previously deemed to be undesirable. These areas are renovated into more upscale neighborhoods, thus causing gentrification.

Lower rents attracts investment and capital from the wealthier classes which ultimately increases the property value in those neighborhoods. The low rent is also a good reason for investors and developers to invest in those areas, as they can perceive what the potential profits are going to be. So, the rent is a primary reason for attracting residents and investors alike.

There are people who appreciate the aesthetic factors of the older areas, and choose to move there only for the old architecture and design of those areas. The historical houses and streets in the previously deemed undesirable areas caters to the aesthetic demands of the population, which can be fulfilled thanks to gentrification.

Increasing Population

Low rent

Aesthetic needs

Immigration