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What does it take to turn the tide on housing affordability?

An op-ed by Housing Europe's Secretary-General, Sorcha Edwards following the conference of the Portuguese EU Council Presidency 'Towards a European approach to Housing Policy'

25 May 2021 | Published in Energy, Economy, Social

In Lisbon, which has a population of around 2.8 million and is the main economic hub of the country, only 14% of residents agree that finding good quality housing at an affordable price is easy or somewhat easy, the 2021 ‘State of Housing’ report, launched by Housing Europe this March, stresses. Looking beyond the capital city, rental prices all over Portugal have increased by over 10% in the past five years, outpacing the Eurozone average by 4 percentage points. After seeing the dire consequences of unmet housing needs at local and national level, the Portuguese EU Council Presidency has called for ‘a European vision for the housing policy that could guarantee access to housing with dignity at accessible prices'.

Determined to deliver ‘a fair, green and digital recovery’, the Portuguese Presidency has rightly focused on housing - the fundamental human right which if delivered properly, has the potential to make European cities inclusive, resilient, vibrant hubs for learning, commerce and culture. Policies that have worked in this direction are not a mystery and several cities, such as Vienna and Helsinki have done this. But what is the starting point and challenges for the biggest part of Europe today?

The housing crisis by the numbers

Sky-rocketing house prices that outstrip incomes have been the tough reality for many and COVID-19 is increasingly making the proportion of the population in dire need of affordable housing even larger. The 2021 State of Housing in Europe report outlines that the share of Italian tenant households with arrears on rent payment in the private rental sector has jumped from less than 10 to 24% in just one year since the start of the pandemic. In Czechia, 1 in 4 tenants feared they would have to leave their current home in the next 12 months. Social housing production decreased by 40% in Ile-de-France in 2020 while demand has increased by 30,000 applications totalling 750,000. At the same time, Council housing waiting lists in England already count 1.1 million households, and could be set to nearly double to 2 million households next year. Evidence shows unambiguously a link between overcrowding and mortality and that as little as a 5% increase of households living in poor housing conditions can result in 50% higher risk of incidence and 42% chance of losing the battle with the coronavirus. Tonight, 700,000 people in Europe will not have a roof over their head.

In the meantime, affordable options are further melting by national intentions to privatise the already existing social housing stock. In Hungary for instance a proposed amendment of the Hungarian Housing law insists on municipalities to sell their housing units to inhabitants at 10-30% of the market price, a decision that would ‘further deepen the current urban housing crisis and increase already existing housing inequalities’, a petition to raise awareness by Habitat for Humanity in Hungary stresses.

The enormous appetite to maximise profit with housing benefits only a few

Leaving the housing market to regulate itself, simply increasing the supply of housing or short-term financial boosts have in a way led to where we are today. If we had to bet on a single winning approach to a working housing policy, that would certainly be a genuine, long-term political commitment to improve housing in Europe. To work seamlessly and effectively, a European Housing (Finance) Alliance will work on aligning better finance with better knowledge. Speaking about finance, the set of the Alliance will allow EU-27 local, regional and national leaders and the social, affordable housing sector to master the blending of available EU funding. Available amounts are not negligible. EU Cohesion Policy of €377 billion will continue to invest in social infrastructure and providing basic and social services to citizens through the ERDF and ESF funds, an increased amount in the new Multiannual Financial Framework (MFF) is available in investing in sustainable neighbourhoods. The Just Transition Mechanism will assure that no one is left behind in the green transition with an overall of at least €100 billion budget. The new InvestEU is going to support affordable social and student housing with €16.6 billion. Finally, the Recovery and Resilience Facility’s €560 billion budget gives the possibility to EU-27 to invest more in the sector, making the link with National Energy and Climate Plans, as well as fulfilling the recommendations of the European Semester. While there are amounts that can be a quite large proportion of GDP in some Member States, there are also significant gaps in investment. In Flanders, the total amount for recovery for the entire region is not sufficient to renovate the social housing stock. Similarly, the Dutch recovery plan would be enough to improve only buildings in E, F or G class but not B, C or D.

The European Housing (Finance) Alliance’s second major asset will be the exchange of knowledge. There are hundreds of ideas, projects, ideas, energy coming from the affordable, community-led, social housing sector that build communities, improve livelihood and fight homelessness.

There is no excuse for policymakers not to step in and recognise these projects without putting them in direct competition with big bidders. Robert S. Lynd Professor of Sociology at Columbia University, Professor Saskia Sassen raises the concern that ‘worldwide real estate accounts for almost 60% of all global assets including equities, bods and gold. The top 100 cities account for 10% of the world’s population, 30% of the World’s GDP but 76% of property investment.’

Willingness and political commitment can turn the tides

One might think that there might be short-term loss returns. Having affordable housing stock that remains accessible also in the future, however, provides a significant payback in terms of people investing in the economy, living in a more inclusive society and having a resilient youth and ageing population. It is creating and sustaining tried and tested land, environment, finance, governance approaches that lead to more affordable housing. On 6th October, Housing Europe, the United Nations Economic Commission for Europe (UNECE) and UN-Habitat will put on the table policies that have succeeded, providing a Housing2030 toolkit with successful, comprehensive measures that European leaders can adapt to their reality.

As the Portuguese Minister for Infrastructure & Housing, Pedro Nuno Santos concluded the EU Presidency’s ‘Towards a European Approach to Housing Policy’ conference ‘if we can assume, and we are assuming that housing is the biggest challenge we have for the next decades, we have to be consequent and put the money where the mouth is at the moment. If we want Europeans to support the European project, they have to feel that it goes directly to their needs and concerns. So, if housing is a problem in all European countries, we also need a European answer. That's the time to go out from the papers & take concrete actions.' Let’s make real policy.