Residential patterns in urban areas

By Matt Burdett, 14 May 2018

On this page, we look at factors affecting the pattern of residential areas within urban areas, including physical factors, land values, ethnicity and planning.

  • An upmarket development in Tseung Kwan O, on the outskirts of Hong Kong. Can you tell what kind of people live here? Why would this be a place they choose to live? Source: By the author.

Patterns of residential areas

The pattern of residential areas in cities varies considerably, but in general, there are few people found in the very centre of the city due to the high land values. This space is occupied by businesses in the Central Business District.

Cities in High Income Countries often have their most expensive housing around the edge, as seen on the Burgess Model and others. In Middle and Low Income Countries, cities have their most expensive housing around the CBD, with very poor quality housing including squatter settlements around the edge. However, this is a huge generalisation, and every city will have a unique pattern depending on the combination of local variations including physical factors such as coastlines, rivers and hills; land values; ethnic groups; and government planning.

Physical factors

The experience of cities in High, Middle and Low Income Countries is often very different.

Proximity to water

In wealthy cities, water is often seen as a calming and positive feature of the environment. Waterfronts on coastlines, rivers and canals offer pleasant views, open space, and opportunities for water sports. This makes prices higher for these locations. In addition, industries that used to use the water-edge (e.g. for ports and docks) have now closed down so the historic buildings are converted into high-class residential apartments. A famous example of this is the London Docklands development.

In poorer cities, water can be a hazard because people are unable to prevent their house from being affected by flooding, high winds and water-borne diseases that may come from the water. This makes it more likely that the land will be used for poor quality housing.

Steep hillsides

In richer cities, hillsides offer good views and a sense of openness. The extra height can also be attractive in hotter cities as it ensures a cooler temperature and more breeze, which makes the environment more pleasant. In Hong Kong, some of the costliest housing is high up on ‘The Peak’ above the main Central Business District in Central, partly because the climate is more pleasant.

However, it costs a lot to build safely on steep slopes. In poorer cities, squatter settlements and poor quality housing is squeezed onto steep slopes that can suffer from mass movements, especially in locations with heavy rain.

Land values

The pattern of urban land use is often linked closely to bid rent. Bid rent is the maximum amount of money per square meter that a particular user is willing to pay, so it reflects the value of the land.

As residential land use is not profit making, it is unable to pay the high rents that businesses and industry is willing to pay for the most accessible locations. The pattern of bid rent varies a lot with each city, but in general the highest bid rent is payable in the city centre and declines with distance from there.

The traditional view

In richer countries, the wealthiest people are likely to live on the outskirts. They can afford private transport to get to their jobs in the city centre. There is an added bonus: the low land prices mean they can afford to buy more land, which means they can build larger houses. Therefore, the price per square meter is low, but the price for the building overall is high.

Meanwhile, the poorest people are generally found nearer the city centre. This is because they cannot afford the cost of private transport, and need to be near to their jobs in the city centre. To make the most profit from the expensive land in this area, landlords build small houses – so the price per square meter is high, but the total area taken up by each house is low and therefore the price per house is also low.

In poorer cities, this pattern is often reversed. The poor transport infrastructure makes it unappealing to travel long distances to work, so the richer inhabitants live near the CBD despite the high bid rent. The poorest people have no money at all for rent, and are forced to live on the unoccupied land illegally. This land is often hazardous, or far from the city centre, so the land value is low.

A modern view

More recently, developments in cities have made the bid rent more variable. Transport links have become more important in richer cities, which means that being close to an airport or a highway junction on the outskirts of the city may mean higher bid rent than further in. Furthermore, the gentrification and redevelopment of old industrial areas in the inner city has attracted high income people – especially young professionals – to move into these historic areas, as they can live near their jobs in the CBD and still have a high quality local environment to live in.

In lower income cities, the congestion and pollution near the CBD has driven some of the higher income inhabitants away from the city centre into satellite towns, such as Barra on the outskirts of Rio de Janeiro in Brazil. These brand new residential areas offer a cleaner and safer environment with larger housing, and new employment opportunities thanks to information technology: it’s no longer necessary to commute to the CBD. Transport developments such as new highways and mass transit rail networks (metro / subway / underground systems) have also helped this to happen.


Ethnicity refers to the cultural similarities within a group of people. It is essentially a description of culture: it can relate to languages, religious beliefs, food, clothing and leisure activities.

In many cities, people from a similar ethnic group appear to live close together, especially where new migrants are concerned. This can be because of internal or external factors. Internal factors are decisions made by people in the group itself – such as wanting to live near each other because they worship at the same temples, speak the same languages, or shop for the same products. External factors are things that are decisions made by people from the other ethnic group(s), such as making people feel unwelcoming in public spaces, or not allowing people from minority ethnic groups to rent a house.

This has resulted in ‘ghettos’ in some large cities. A ghetto is usually a part of the city that has people almost entirely from one minority ethnic group, and is often an impoverished part of the city. The original ghetto was in Venice in Italy, where Jewish people were confined to live in one part of the city (called “Il Ghetto”). The term has more recently been frequently applied to Black districts of major cities in the United States.

Over time, people from ethnic minorities spread out into the city. This is especially the case for second and third generation migrants. (A first generation migrant is the person who migrates. A second generation migrant is the child of the first generation. The third generation are their grandchildren.)

The impact of ethnicity on residential patterns is described in more detail on the page on this site “Residential patterns and ethnicity”.


The level of planning of a city has a direct relationship to the type of residential patterns in the city. This can be seen in more detail on the page on this site, ‘Growth processes of cities’. In general, urban planning historically occurred on an ad hoc basis, with governments approving individual planning applications by developers. Developers generally aimed an area at a certain group such as middle or high income families. This has changed and now there is often an aim to create a diverse range of housing in an area.

Mixed income housing

Today, planners often ensure a mixture of housing suitable for different socio-economic groups is available within the same area. This is for several reasons (Levy, McDade and Bertumen, 2013):

  • It can bring “better quality housing, improved services, increased neighborhood amenities, and a safer environment” to poorer neighbourhoods, as they attract wealthier residents.
  • An improvement for the prospects of poorer residents, as they can use the networks used by the wealthier inhabitants and adopt “behavior and lifestyle alternatives as modeled by higher income neighbors”.
  • Attract further investment to the area resulting in “increased safety; the development of more or improved amenities, such as stores, parks, and playgrounds; and, possibly, improvements to transit access and schools (buildings and instructional quality). Revitalization might also increase a jurisdiction’s tax revenues from increased property values and new businesses”.

Other benefits include helping low and middle income households find somewhere to live in areas that are currently wealthy and unaffordable for poorer residents (Harper, 2017). It can also help to ensure that a balance of services can be provided locally, rather than forcing low income workers to endure long journeys from their homes to jobs.

There has been some criticism of mixed income housing projects. One example is in London, where developers have been required to provide a proportion of ‘affordable’ housing for people on low incomes. Some developers have tried to keep the most expensive housing exclusive by having two entrances – one for the expensive apartments, and one for the affordable apartments. The entrance for the cheaper apartment has become known as a ‘poor door’ and is seen as leading to social exclusion (Osborne, 2014).


Bellman, 2014. Segregation and urban form: Towards an understanding of dynamics between race, population movement, and the built environment of American cities.

Cable, 2013. Racial Dot Map: One Dot Per Person. Demographics Research Group.

Harper, 2017. How Mixed-Income Housing Can Benefit Both Communities and Investors.