New Old Approaches to Affordable Housing in the EU?

by Greg Foster, Area Vice President, Habitat for Humanity EMEA | This article appeared on Euractiv

In November 2016, the European Commission outlined its social and economic priorities for the year in the autumn package of the European Semester. Housing is mentioned. However, it is viewed as a commodity rather than a social right. And insufficient funds are set aside for the development of affordable housing. Given all this, can Europe house its citizens properly?

Affordability of housing is the biggest challenge across the EU at the moment. According to Eurostat, 40% of poor households in Europe experience housing cost overburden, which means one spends more than 40% of income on housing. Almost 17% of the population of the EU-28 lives in overcrowded conditions. This number is much higher, around 40%, in the new member states like Bulgaria, Hungary, Poland, Romania and Slovakia. In addition to that, in Bulgaria, Croatia and Slovakia between 60-70% of young adults live with parents since they cannot afford their own homes.

In economically vibrant areas, housing problems are caused by rising prices. In a number of countries house prices have increased beyond the 6% threshold in Sweden, Hungary, Luxemburg, Ireland, Denmark, the United Kingdom and Estonia. In lesser developed countries, the lack of institutions and policies ensuring affordability create problems for poor households. Social housing programs have been scrapped by many Central and East European states. Today, only 3-5% is dedicated to social housing, whereas in Western and Northern Europe it is at least 14-20%.

Of course, housing is not a core responsibility of the European Commission and is still managed by national policies of the member states. At the same time, housing plays an important role in social inclusion, labor mobility, health and sustainability of social policies – all the Europe 2020 strategy goals. Hence, housing does feature in the European Semester priorities.

It is encouraging to see that housing is finally in the spotlight. However, the EU should develop a better understanding of housing problems faced by its citizens. Once done, it is crucial that member states develop a means of converging their housing policies. This would entail sharing, adopting and implementing best practices that would help move their policies closer and better coordinate housing provisions. At the moment, housing is provided by the private sector. But since housing is a basic human need and right, institutions and governments should be able to intervene and ensure that its citizens have at least the opportunity to access basic housing in times of economic downturn.

To take housing seriously in the EU, a number of steps should be considered:

• Develop key principles of adequate and affordable housing in all member states. There should be a set of common housing indicators to measure house prices, house exclusion and homelessness. At the moment, these are treated differently in each country. Data is available through EU-SILC annual surveys, statistics on income and living conditions in member states. It can be turned into a scorecard to pay closer attention and provide analysis on problem areas. For example, have a Housing Index or Adequate Housing Strategy similar to that of the EU’s Roma Strategy.
• More attention should be paid to default housing loans and debt management. More policies and regulations should be in place to avoid house price speculation, ease the effects of non-performing loans and turn foreclosed property into social housing.
• Stimulate social rents and other tenure options apart from homeownership. Some member states are starting to take steps in this direction. For example, Poland announced a launch of its new housing program focused on build-to-rent options.
• Housing, welfare and economic policies should be integrated. It is important to develop a better understanding of the needs of citizens, especially in the area of housing. Integration of newly arriving migrants should be considered in connection with current economic and welfare policy decisions too.
• As a long-term suggestion, EU should look into setting up a central fund to test innovative housing schemes for lower and middle income households. It can also collect and disseminate good practices and innovative housing solutions.

None of this is new or rocket science. These solutions already exist in some areas. We need to look at housing in a broader way and coordinate existing approaches. This will help ensure European citizens have decent and affordable living spaces. And in the long-run make Europe inclusive, socially stable and prosperous by 2020.