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What signals is the European Commission sending to EU governments in the latest European Semester Autumn Package?

Housing Europe insisted that investment into sustainable social housing should be excluded from public debt calculation

Brussels, 21 November 2023

The European Commission published the so-called ‘Autumn Package’, kicking off the 2024 Semester cycle. Housing Europe was invited to comment on the package during a join meeting of SPC and EMCO Committees with the European Commission, as part of a delegation of civil society organisations led by the Social Platform. We report our reaction below.

The most ‘strategic’ document in this phase is the Annual Sustainable Growth Survey (ASGS), basically setting the priorities for next year. While last year the key topic was the energy and cost of living crisis, this time the ASGS strong focuses on competitiveness, linked with the green/digital transition. Housing plays an important role in this ‘competitive sustainability’ (which according to the document includes the four dimensions of macroeconomic stability, in many ways.

If we take the perspective of productivity, already few years back a World bank report  highlighted how productivity growth, which comes with higher wages and better jobs, is concentrated in cities and industrial clusters - yet, cities are precisely where housing prices are prohibitive. To remain attractive and competitive our cities must remain places where people can live – today what we see increasingly is key workers like nurses or teachers can no longer afford to live where they work. Increasingly students have to turn down opportunities in some of the best universities because of lack of accommodation. With an ageing society, homes must be adapted to be able to support older people living an active and independent life.

From the point of view of macroeconomic stability the Alert Mechanism Report highlights the fact that increasing interest rates are leading to less transactions and there is a tendence towards lower house prices and concern over potential increase in debt and mortgaged default. However, it completely oversees the impact this is having on demand for rental housing (as highlighted in the EC most recent Economic Review)  – in a context where there are supply shortfalls and rents are already out of reach for many people on average salaries in major cities. This risks further creating tensions in a context where homelessness has been growing for decades and so have waiting lists for social housing. This is why we would like to see better indicators in the MIP scoreboard, not only focusing on house prices but including rents.

Further on the priority of fairness, the sector was glad to see the proposed Joint Employment Report highlight issues with housing un-affordability and housing exclusion, in line with the Social Pillar. For the past two years data on housing cost overburden have been included among headline indicators of the social scoreboard. However the current ‘traffic light’ system ends up highlighting housing cost overburden as a critical trend only for very few countries, but we believe the phenomenon is much more widespread and trust more effort will be put into understanding the housing affordability crisis in the country reports.

When it comes to environmental sustainability, our sector is leading on innovations and showing a stronger effort in terms of renovation than the private sector but globally we’re nowhere near reaching the targets as shown in our latest State of Housing report, and the current context in the construction or renovation sector is not helping. There is a need for dedicated funding, as well as capacity building  and better skills in energy efficient construction and renovation, which again we hope to be reflected in the country reports next year.

The potential of what can be achieved through affordable and sustainable housing, in terms of economic, social and environmental returns, is huge.

To sustain all these efforts there are increasingly EU funds and financing opportunities available which we clearly much welcome and have produced analysis of investment into social housing and renovation from RRF and a guide funding to tackle homelessness. We look forward to the announced analysis on structural funds and how the different opportunities can better work together in Member States. But their potential will not be fully used unless rules and access are simplified, and there are reforms of housing systems – many countries today are basically still lacking a real housing policy framework and social housing sector. To support better policies for affordable housing, we have worked together with UNECE and UN-Habitat to produce the #Housing2030 toolkit.

Last but not least, this will require also dedicated government funding, and we share the concerns raised by Social Platform about contractionary fiscal policies. We believe investment into sustainable social housing (together with other key social infrastructures with a high social and environmental return on investment) should be excluded from public debt calculation.