Housing affordability is currently one of the most complex policy challenges our societies in Europe are faced with. As part of our work to identify solutions to this challenge, and in light of the launch of the 'State of Housing in Europe' 2019 report next autumn, we present a series of interviews with institutions and international stakeholders that have been looking at affordable housing, publishing influential reports and generating valuable data.
Our fourth guest is Dr. Steffen Wetzstein, a Human Geographer and Political Economist with wide-ranging research, teaching and consultancy interests on urban transformations in a global world. Steffen draws on more than 25 years of professional experience in academic, policy and private sectors across Germany, Australia and New Zealand. His latest 3-year senior research position at the Brandt School of Public Policy (University of Erfurt) allowed him to investigate in-depth the Global Urban Housing Affordability Crisis from a comparative international perspective (Berlin, Vienna, Singapore, Sydney, Auckland).
- Why would you say it’s important to look into housing affordability?
Under contemporary policy settings, we have focussed hard on creating the ‘liveable city’ based on amenities that the market rewards, but have largely forgotten about the ‘affordable city’ that ensures liveable futures for all. Access to affordable and adequate housing has become one of today’s fundamental urban problems, perhaps the social problem our generation faces. I got first-hand experience on the growing issues, tensions and contradictions surrounding urban housing across three continents; so I try to raise awareness and point out possible strategies that can future-proof our cities.
Affordable access to urban housing now strongly divides winners and losers. While the latter group suffers immediately, ultimately all residents lose out. I have observed vexed social issues (e.g. working homeless), cultural problems (e.g. losing mixed neighbourhoods), worrying spatial sorting (e.g. centrifugalisation), economic inefficiencies (e.g. ‘essential worker’ problems) and environmental issues (e.g. super-long commuting). As the lower middle classes get affected by imbalanced urban housing systems and the upper middle classes fear future material losses, protective ethical responses (e.g. NIMBY-ism) and escapist politics (e.g. rising populism) further jeopardise liveable urban futures for all. We are really only at the beginning of acknowledging the magnitude, effects and long-term societal impact.
- Can you name one phenomenon/issue which shows a problem with housing affordability? How does this manifest in data/trends that can be monitored?
Meaningfully engaging with structural housing affordability means looking at historical trends that reveal imbalances much clearer. In fact, this ‘long view’ perspective is vital to comprehending and removing the road blocks to affordable urban futures for all. One application is the calculation of national and urban housing gaps. New Zealand economist Shamubeel Eaqub recently detected a 500,000 gap in national housing supply over the last 30 years, compared to previous decades. Massive for a country of not even 5 million, isn’t it?
Some analysts would see market failure at work and blame planning systems for restraining investment. This is largely nonsense. The private sector does what it has always done, although curtailing speculation like land banking needs stronger regulation. These structural housing gaps illustrate overwhelming and politically enabled urban demand-surges, wealth/income polarisation and a reluctance to supply subsidised housing. The latter is mainly about reduced commitment to social/communal housing, the privatisation of subsidised stock and the shift from supply-side to demand-side subsidies.
We should keep in mind that structural barriers to affordable housing solutions are made up of wider processes like financial circuits and demographic changes but also the often entrenched, self-protecting ethical and political behaviours of all of us.
- If you have to choose one element as a major cause of lack of affordable housing, which one would it be?
Our century has seen the steep rise of the city, in particular larger, capital and international cities, in the centre of national wealth creation strategies. Rather than industries it is cities - fuelled by agglomeration and network economies, and the ability to absorb new populations - that function as wealth engines and social accelerators. Yet, under uncertain and low-growth conditions, cities are the quintessential asset-producing entities, and it is urban land that has become the most highly priced asset.
What oil was to the industrial age, urban land is to global financial capitalism. The expectation of rising urban land prices underwrites Financialised Housing, resources governments and promises private households and investors secure investments, capital gain, retirement support and often healthy rental returns. Owning land and property also ensures relative household security, expresses identity, reflects status and allows producing food; to name a few non-economic benefits.
Yet, the many residents, households and businesses that happen to not own urban land are paying the price. Moving from symptom-focussed ‘band-aid policies’ to ‘future-building policies’ means dealing with the urban land question head-on. Exciting intellectual work, proliferating initiatives and broader politicisation across the continent make me hopeful that we can still counter the trend towards a highly divisive Victorian-age urban landed gentry.
Can you name one or more solutions which could help tackling this?
The 21st century western city should re-introduce the almost forgotten leasehold tenure (public land ownership and 99-year lease to flat/house-owning households) that forms the backbone of the best public housing programme worldwide; the Singapore housing system. Urban leasehold futures call for healthy, long-term urban government finance arrangements that do not rely on selling land. Much operational and financial innovation will be required (e.g. lease roll-over procedures), but the time is over-ripe for this tenure type.
The obvious other approach is to considerably raise the stock of subsidised housing based on urban/ communal landownership. Remarkable 100 years of the Vienna social housing pact inspire. For those who can’t access full homeownership, urban leasehold and private rental, we need to re-create the incentives for non-profits, communal organisations and cooperatives to build and manage affordable urban housing for generations to come.
For these strategies to become financially sustainable, we need to tax the current land winners; appropriately, fairly and transparently. But we must also mobilise all urban land owners and incentivise subsidised construction and operation. Such interventions are a challenging ethical and political task for democratic societies, and require consent beyond what party-political systems can deliver. We face a truly ‘whole-of-society’ project.