Illegal building can be the consequence of a combination of urbanization, overpopulation, homelessness and poverty in which case expanding slums, Shanty towns or similar will result.
On the other hand, illegal building activity may be due to profitable speculation with and exploitation of valuable real property.
[citation needed] In some cases it can be observed that legal or tolerated settlements are later declared illegal by governmental institutions in order to make room for more lucrative investments or simply for political demonstration purposes (see e.g. Operation Murambatsvina) sometimes under the pretext of beautification.
Increased landslide risk has been found to be associated with illegal building in hillside regions of densely populated urban areas in Italy[2] and Bosnia and Herzegovina,[3] because of loss of stabilizing vegetation by deforestation, etc.. Due to uncontrolled increase in impervious surface, the role of illegal construction has also been discussed in connection with flash floods (see 2011 European floods#Italy).
In addition to human observation, large-scale screening for illegal building (activity) can also rely on remote sensing technology using satellite imagery (e.g. from EROS B, IRS-P5,...) and geospatial information systems.