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I t's a timber-clad house with open-plan living, pale floorboards and large windows giving views across Chichester canal. This building designed by London-based Baca Architects has a unique feature – it floats.

Completed this month, the amphibious house was developed as a prototype by Baca and Floating Homes, a manufacturer specialising in flood-resilient housing, in response to a competition launched last year to find a solution to London's housing crisis.

The house is intended to be practical, affordable (a two-bed unit will sell for £200,000) and equipped to deal with floods, by rising with the water levels. Ultimately the company wants to unlock redundant waterways by building on "bluespace" sites – manmade docks, canals and marinas – across London.

"Collectively, bluespace has the potential to deliver as many as 7,500 floating homes with minimal disruption to existing communities", says Richard Coutts, director at Baca Architects.

The living area of 'The Chichester' showing the roof terrace stairs. Photograph: Mark Junak

Floating architecture has real potential to help ease some of London's housing problems, says Alex De Rijke of dRMM architects, which won a competition to design the UK's first floating villages in London Docklands.

"Architecture can only respond to overpopulation by addressing the questions of density, economy and speed of construction," says de Rijke, "The space of large rivers in urban areas can offer answers to these questions."

Aerial illustration of DRMM's Docklands project. Photograph: Jason Hawkes. 3D visualisation by Persona - id

Architects and city planners across the world are starting to look beyond the traditional confines of the city, towards building on water as one of the answers to reducing inner-city population density and also developing flood-resilient designs. Global damage to cities from flooding could amount to $1tn a year by 2050 if no action is taken, according to a World Bank report.

Floating architecture is nothing new. Traditional floating villages are common in deltas and along the Mekong river in south-east Asia. But integrating age-old designs into a modern city is a different matter entirely.

Some cities are further ahead than others. IJBurg is a collection of floating houses built on six artificial islands on IJ Lake in Amsterdam, designed by Marlies Rohmer. It was conceived to deal with the city's critical housing shortage problem as well as its vulnerability to flooding – more than half of the Netherlands is at or below sea level.

The housing is a mix of expensive waterside condos and social housing, with about 30% of the community's 18,000 houses allocated to low-income residents. When complete, the development will provide homes for 45,000 residents on 10 islands.

In Copenhagen, architecture firm Urban Rigger has unveiled floating student housing made from end of life shipping containers. Each Urban Rigger has 12 studio apartments which share a courtyard complete with a BBQ area, bike racks and a kayak landing, and is powered in part by solar energy.

Tethered to docks in the city, the first students are due to move at the end of the year and will pay around £500-£600 a month. Over the next decade, the company plans to build 1,000-1,500 containers in "harbour, canal and river intensive cities" across Europe, says founder Kim Loudrup.

Urban Rigger floating housing. Photograph: Urban Rigger

It's about "using infrastructure that's not being used for anything apart from looking nice", says Loudrop, who admits floating housing is "only part of the puzzle" when it comes to solving city housing crises. The beauty is, he says, that this kind of housing "can be initialised and utilised immediately; it comes in, stays for a period of time and then can move away again."

Building on water isn't straightforward, however. The recent collapse of the Makoko Floating School in Lagos, one of the most famous examples of floating architecture, shows some of the complexities.

The award-winning lagoon structure designed by Nigerian architect Kunlé Adeyemi of Dutch studio NLÉ Works was built to provide a school and community centre to a floating slum in the city but collapsed in June after heavy rainfall.

Local residents work to dismantle the Makoko floating school after it collapsed — Local residents work to dismantle the Makoko Floating School after it collapsed. Composite: Reuters

Adeyemi says that the building had been decommissioned for months and was only intended as a prototype. But it led to a row as a local headmaster, Noah Shemede, raised concerns about the viability of the structure.

There are also environmental concerns. The need for foundations of many floating buildings to go deep into the river bed, for example, will have an impact on the environment, says Phillip Mills, director of the Policy Consulting Network, and a specialist in water construction.

"Foundations or structures within the river could also alter the river bed with silt erosion and deposition elsewhere in the river. The same thing already happens around bridge piers," he says.

Building floating structures can also severely alter the flow of a river such as the Thames and disrupt transport, a spokesperson from the Port of London Authority explains. "What might suit property owners or private developers best is not always best for the city. Londoners have said they want to see the Thames used predominantly for transport or leisure. Any structures in the Thames could impact the flow of the river and create obstacles for watercraft."

However, Lucy Bullivant, adjunct professor of history and theory of urban design at Syracuse University, thinks there are greater environmental consequences building on land – such as the tendency to be more car focused – than on rivers. "Floating designs will create a good anchor point for plants to help foster biodiversity and create habitats for fish and birds."

Building on bluefield sights can be environmentally friendly, according to Mark Junak, director of Floating Homes. He says floating structures such as those at Noorderhaven in the Netherlands have recently been subject to underwater drone surveys to observe whether their construction has negatively affected the ecosystem.

According to the research project, the underwater footage "revealed the existence of a dynamic and diverse aquatic habitat in the vicinity of these structures, showing that floating structures can have a positive effect on the aquatic environment".

For London architect Carl Turner, who has designed a pre-fabricated, open-source amphibious house specifically designed to float on floodwater, called the Floating House, climate change means needing to work with water.

"You either protect the house or protect the land," he says. "Creating large-scale flood protection zones is expensive and in itself potentially harmful to the environment. Once breached, homes are left defenceless, as opposed to floating homes that can simply rise with flood waters."