A recent session between Housing Europe and the European Commission directorate responsible for economic and financial policy (DG ECFIN) was an opportunity for our team to report on European trends of reduced supply-side public investment in non- or limited-profit housing.
Meanwhile, since 2001, the difficulty of accessing adequate and affordable housing has grown. This is most acute for single parents, couples with two or more children, people with precarious jobs, children in public care, and people with disabilities. Migration of up to 3% of the population in some Member States is now adding to this difficulty.
Housing markets tend systematically to over-price and undersupply. At the same time, Eurostat reports house prices growing at their fastest pace in over a decade. However, it is important to note that the national data overlooks that rents in most cities are significantly above 30% of the net income affordability threshold for the average single-earner household. In 12 of the 29 capitals reviewed, this rises above 60%.
As Member States look for alternatives to expanding the cost of demand-side subsidies, the exchange highlighted successful systems in place in Europe which increase the supply of homes that remain affordable in perpetuity and have proven replication potential.
The Danish revolving housing fund for investment in non-profit housing, now being replicated in Latvia, in an exchange facilitated by the OECD was explained. The Austrian model of cost-rental housing which accounts for between 30 and 50% of the annual new construction, is now being replicated in Ireland was also introduced. A study, to be launched in September, reveals that cost rental supply is proven to have a price-dampening effect on the for-profit market.