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Analysis of the 2019 European Semester ‘Autumn package’

Let us take you through the most relevant points for housing

Brussels, 23 November 2018 | Published in Economy

On November 21st the European Commission published the 2019 Annual Growth Survey and the other documents which taken all together form the ‘autumn package’, officially starting the 2019 European Semester cycle. Housing Europe has looked through these documents trying to identify the most relevant points and ‘hooks’ for its members.

The Annual Growth Survey (AGS) is the key document taking stock of the developments over the past year and setting the priorities for the European Union and its member states for 2019.

At first glance, we regret to see that this year’s document includes no specific references to the need for social and affordable housing in ensuring equal opportunities for all as was the case in the 2018 AGS. Having said this, it’s however important to note how the broader priorities set by the AGS can be relevant.

In terms of priorities, the approach taken by the Commission is summarised as follows: ‘The key to a prosperous future remain (1) delivering high-quality investment; (2) focusing on reforms that increase productivity growth, inclusiveness and institutional quality; and (3) continuing to ensure macro-financial stability and sound public finances.

There’s a strong focus on the need to increase and develop new skills, foster digitalisation and technological development, and investing into a low-carbon, circular economy, including through innovation. These are all aspects where the housing sector is leading in terms of innovation can deliver results contributing to European objectives. Indeed, the document clearly refers to Targeted investments in residential construction, coupled with simplified national regulations, are needed to make housing more affordable and curb energy consumption.’

Throughout the report, the Commission points to the fact that the times are ripe to boost investment in strategic areas. More than this, what Europe is presented with today is a quite unique combination of economic growth, increased fiscal capacity in a number of member states, and low interest rates – a situation that the report highlights may not last for long, in the light of global changes. In this context, the EC puts the focus on supporting investment.

We can only hope that to be consistent with the annouces approach the Commission in its country reports will highlight and identify gaps in investment into adequate, affordable and sustainable housing – in line with the findings of last year’s report ‘Boosting investment in social infrastructures’ – and mobilise EU and national reforms in this sense.

The AGS calling for more and better investment

The Commission’s proposals for the next EU Multiannual Financial Framework fully support the delivery of more and better investment by national authorities and the private sector. As mentioned earlier, the Commission intends to ensure more effective links between the European Semester and EU funding for 2021-2027. Moreover, the new InvestEU Programme will bring together under one roof the multitude of EU financial instruments available to support investment. This will make EU funding for strategic investment projects in Europe simpler, more efficient and more flexible.


The 2019 European Semester will have a stronger focus on assessing investment needs to guide programming decisions for 2021-2027. The analysis in the 2019 country reports will look at investment needs in each country, including – where relevant – sectoral and regional dimensions. Based on this analysis, a new annex to the country report will identify those investment needs that are relevant for the European Regional Development Fund, the European Social Fund Plus and the Cohesion Fund during the 2021-2027 period. This will provide a solid analytical input to the programming dialogue with Member States.

Building on the country reports, the Commission also intends to identify, as part of its proposals for the 2019 country-specific recommendations, priority areas for public and private investment to further facilitate the implementation of growth-enhancing reforms’.

The Alert Mechanism Report (AMR) is published together with the AGS. It is the starting point of the annual cycle of the macroeconomic imbalance procedure by identifying areas of risk which can lead to…, based on a set of indicators. The latter notably include house price increases (unfortunately only at macro/national level, which does not allow to identify overheated housing markets at regional/local level).

The Alert Mechanism Report highlights risk of house price overvaluation in some countries

The report finds that ‘House price growth has accelerated and turned positive in a growing number of Member States, and more countries are exhibiting possible signs of overvaluations. At the same time, house price growth has recently moderated in the countries where the evidence of overvaluation is the highest. Conversely, strong accelerations are observed especially in countries that, at present, show no or moderate evidence of overvaluation.’

All fine then? Not really, as ‘The protraction of sustained rates of real house price growth have brought house prices back to or above the pre-crisis maxima in a number of countries, namely Austria, Belgium, Czechia, Germany, Luxembourg, Malta, and Sweden. Real house price growth rates above those of income and other relevant variables normally determining house prices are driving house price levels in a territory of possible overvaluation in a growing number of countries.’ Furthermore, ‘in a number of countries, including Denmark, Luxembourg, Sweden, and the United Kingdom, overvalued house prices coexist with large household debt levels.

The report announces the following countries will be covered by an in-depth review in 2019: Spain (which is currently in the corrective arm of the MIP), Bulgaria, Croatia, Cyprus, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Romania, and Sweden.

Last but not least, the Draft Joint Employment Report provides an annual overview of key employment and social developments in Europe as well as Member States' reform actions, and monitors Member States' performance in relation to the Social Scoreboard set up in the context of the European Pillar of Social Rights.

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Issues related to housing – both in terms of quality and affordability - feature quite prominently in this year’s Joint Employment Report. ‘In a context where housing-related expenditures amount to a significant share of many households’ incomes and the evolution in the number of homeless is not improving, some Member States have undertaken reforms to improve access to housing, either through the provision of incentives or via preventative measures.’

It is not clear why the data that are rightly used in the Joint Employment Report to take stock of the situation with regards to housing should not feature among the social scoreboard headline indicators that are used to monitor development towards the implementation of the EU Pillar of Social Rights. Housing Europe has been calling on the European Commission to include indicators such as the housing cost overburden rate to ensure consistency with principle 19 of the Pillar[1].

We report some relevant excerpts from the report below:

Housing costs are hitting the poor hardest and especially tenants, highlights the Draft Joint Employment Report

Access to housing of good quality has been improving since 2008, but in some countries a significant proportion of population reports that it encounters quality problems with their dwelling. In the EU, 13.1% of the population reports living in a dwelling with a leaking roof, damp walls, floors or foundation, or rot in window frames or floor in 2017.


‘The share of household disposable income spent in housing-related expenditures remains significant in a number of Member States. When housing costs are taken into account, 156 million people are at risk of poverty, as against 85 million before housing costs are taken into account. This condition is particularly draining for households with lower income. In 2017, 10.2% of households in the EU spent over 40% of their disposable income on housing costs, but this share increases to 37.8% when considering households at risk of poverty. Despite a slight improvement compared to previous years, the housing cost overburden rate remains the highest in Greece, at 39.6% in 2017. Bulgaria, Denmark and Germany are, after Greece, the Member States with highest rates of population experiencing housing cost overburden (over 15% of the population in each). The effect is particularly notable in Denmark and Germany, where the share of people at risk of poverty is below the EU average before housing costs, but above the EU average when housing costs are taken into account. By contrast, in Estonia, Ireland, Finland, Cyprus and Malta less than 5% of the population live in households overburdened by housing-related expenditure. In most countries, tenants who rent at market price are considerably more overburdened by housing related costs than owners with a mortgage or a loan (EU average of 25.1% for tenants paying market rent, compared to around 5% for owners).


Rising rents represent an increasing burden on the poor in some Member States. In 2016, in 7 countries (Ireland, Estonia, Lithuania, Slovenia, Hungary, Austria and Poland) rents calculated in real terms have increased by more than 5% since 2015. High rents can compound the risk of poverty or social exclusion, particularly in countries such as Slovenia, Ireland, Austria and Lithuania where the poverty risk facing tenants is significantly greater than for those who own their homes. National figures may also hide challenges at the level of particular cities.

The recent evolution of the homelessness indicates that the situation is not improving […] homelessness has recently increased in all of the 25 covered Member States except in Finland, where the situation has improved’.


A number of Member States have undertaken reforms in the field of access to housing. Denmark has adopted an action plan to fight homelessness, based on strengthening of preventive measures and improving the guidance on how to exit homelessness. Greece has introduced a new means-tested housing benefit intended for low-income families living in rented dwellings and those paying a mortgage. Spain has adopted a national plan which includes aiding the low-income families to pay the rent and prevent eviction, financial aid for young people buying houses in sparsely populated areas and aid to renovate housing for special vulnerable groups. The Swedish government has allocated additional funds to support non-profit organisations to combat homelessness among young adults.