- By Jamie Shea
The lack of housing affordability is a critical matter with social, economic and territorial importance for Europe. It has been recognised that inequalities in education, health, employment and earnings combine, resulting in significant differences in lifetime earnings across different population groups. What has not been sufficiently acknowledged is that high housing costs exacerbate these differences, embed them into the built environment and result in spatial segregation. Significantly, only limited attention has been paid to the impact the lack of housing affordability may have on the future of social mobility in Europe and its territorial cohesion.
In 2016, the first signs of a broad and stable global economic recovery were reported. According to the World Bank, favourable global financing conditions and stabilising commodity prices have boosted economic growth. However, the emerging evidence suggests that the recovery of commodity prices in general and housing, in particular, are not shared. Although housing prices are recovering, they have often outpaced local earnings. Depending on the exact definition used, ‘housing’ is the largest household expenditure for European families, and one that is steadily increasing ahead of their means.
In 2015, the number of European citizens overburdened by housing costs surpassed 80 million. Homelessness has markedly increased and the social housing waiting lists have reached historic highs. However, since the financial crisis, housing need has not only increased, it has also diversified. There is a continuing need concerning the ageing population, young adolescents, key workers and middle-income households, vulnerable and homeless among other population groups.
Only limited attention has been paid to the impact the lack of housing affordability may have on the future of social mobility in Europe and its territorial cohesion
The effects of the financial crisis have also intensified the fragmentation of the housing markets. Housing shortages in growing cities and functional areas are increasingly accompanied by a surplus of uninhabited properties in other regions of the same country. The presence of low and high housing demand areas within one country highlights the need for sophisticated policies that are both responsive to local market dynamics and relevant to those in need.
Cities are affected by the housing crisis in a specific way. More economically successful cities have higher housing and land prices across tenures. In major cities, the global financial crisis introduced new sources of demand, new actors and new behaviours. Over the last decade, it has become increasingly apparent that local housing supply (i.e. private rent and homes for purchase) in capital and global cities may not reach the local population nor serve the local workforce. These issues pose essential questions related to the nature of housing production and consumption systems today.
Due to the scale of the housing crisis, the housing sector housing sector has been subject to a significant reassessment in the majority of the EU member states since 2008. However, emerging research demonstrates that new national policy measures have focused on providing institutional stability in response to the shock caused by the financial crisis of 2008, rather than adapting to a state that is less exposed to the systemic risks associated with debt, flows of global capital or speculative activity among other emerging phenomena.
As we go forward, it is critical to understand that the global financial crisis has changed the ways housing systems operate. It has introduced new actors and new behaviours in the housing markets that need to be mapped, examined and, most importantly, regulated.
At the EU level, it is important to reiterate that housing matters, not only as a part of other policies but as a distinct policy field with social, economic and territorial significance
New policies need to examine the links between the financial and housing markets carefully, as well as recalibrate state intervention in housing finance. Moreover, these must to be adapted to the present and future housing market dynamic, addressing the increased and diversified housing need. This should include new models of public and private partnership which can fund, deliver and scale innovative solutions from the ground up.
Consistent data collection and analysis are crucial to affecting the many policy changes necessary to effectively respond to these complex new housing realities. Without them, it will be difficult to provide diverse populations with access to affordable housing.
At the EU level, it is important to reiterate that housing matters, not only as a part of other policies but as a distinct policy field with social, economic and territorial significance. An increasing number of European policies and funding streams affect the housing sector even though this is not the mandate set forth for the European Union in the Maastricht Treaty. These need better coordination as well as clear aims and objectives, not just for individual policies but also for the mix of policies and their system-level coherence.
Most importantly, the status of the housing field in the EU should be elevated. Housing is an integrative field with significant potential impact for development and cohesion initiatives. As such, housing shapes and determines our common future.
- By Josep Borrell Fontelles
- By Krystal Gaillard
- Eye on the Geopolitical Ball
- Area of Expertise
- Peace, Security & Defence
- Area of Expertise