Not all housing crises in Europe are equal. For example, in Serbia 29% of households spend more than 40% of their disposable income on housing – this compares to an already-burdensome average of 11% across the EU-28.

But within the European Union, there are vast disparities: the EU country with the highest number of households above the common 40% marker of overburden for housing costs is Greece, at 41%; at 1.1%, Malta has the lowest number of households struggling to pay for their housing.

The discrepancies can also be measured over time and across demographic groups. The 2008 economic and financial crisis has aggravated the burden disproportionately on the poor: in Croatia, Greece and Spain, more than 60% of the low-income population spend more than 40% of its income on housing.

Soaring prices and the shortage of apartment units in many European cities mean that other population groups, such as young people, middle-class employees and workers in non-secure jobs are increasingly priced out of the housing market.

Decent and affordable housing is a core issue in central, eastern and south-eastern Europe, where regulation, supply and quality standards ‒ particularly for social housing ‒ are yet to be harmonised. For example, the social renting housing sector represents less than one per cent of the dwellings in the Czech Republic and Latvia, compared to more than one-third in the Netherlands.

“Traditional models of supply and demand are no longer enough to deliver decent and affordable homes for many Europeans”

While the urgency to address the various housing crises is widespread, the heterogeneity of needs and national contexts require a diversity of responses. But strengthening social integration is a common response to these crises.

In this context, the Council of Europe Development Bank (CEB) finances social and affordable dwellings for people with low incomes or people belonging to vulnerable groups, including refugees and migrants, across the CEB’s 41 member states. Particular attention is directed to the CEB’s 22 target countries in central, eastern and south-eastern Europe.

But it is not just about money. When providing the right financial solutions, it is equally important to ensure the design of the appropriate housing models with different components: assessing which approaches best fit a country’s needs; experimenting with innovative financial instruments; appraising and monitoring social development results; and learning from ex-post independent evaluations how different practices can be adapted to local contexts.

Traditional models of supply and demand are no longer enough to deliver decent and affordable homes for many Europeans. Subsidies and tax benefits for home ownership have, for example, limited impact on people who are young, unemployed or vulnerable. In order to respond to increased and diversified needs, the CEB has recently issued its first Social Inclusion Bond, the proceeds of which will finance projects for social housing, education and job creation.

“It’s not only policies that should be coordinated, but financing solutions too”

Effective housing policy can be an important lever for achieving inclusive growth, fighting poverty and improving access to jobs, as long as it helps provide everyone with affordable, quality housing. But to enhance social cohesion, housing policy cannot be pursued in isolation from other issues. Past allocation of housing for vulnerable populations without consideration of education opportunities or access to jobs and transport has resulted in more unequal and segregated cities, as well as poor community relations.

So it’s not only policies that should be coordinated, but financing solutions too.

Financing housing can amplify the economic and social benefits of transport, energy and other infrastructure investments, especially in cities. In other words, the financing of affordable housing needs a new creativity boost and fresh ideas.

Why not, for example, approach investments through ‘housing start-up’ hubs? Such hubs could be both modelled on and linked to start-up incubators, which share the same objectives: the creation of jobs and wider economic benefits to society. Consider a young person who has a viable business idea that is difficult to execute because a large part of their income goes on housing costs: if a housing hub existed in the same area as the start-up incubator, the business would have a real chance of materialising.

Innovative financial instruments are urgently needed so that European cities can deliver responses adapted to the substantial needs of the housing sector.

IMAGE CREDIT: CC/Flickr.com – Gabriel GHIZILA