Towards non-housing policy tools (such as improving transport and infrastructure in areas outside the big cities) turns its member states EU (along with Greece, of course, which is waiting for over 200 million euros from the revision of the NSRF for the sake of increasing the housing stock) the European Council in order to deal with the explosive crisis housing inside it.
In other words, what the European Council proposes as the best solution to the explosive inflation in real estate prices is to improve transport access to areas outside the major urban centres (and thus to move populations there) of the EU in order to reduce demand and thus apartment prices in them!
This is the main thing conclusion report of a special working group (One Roof, many realities: Europe’s complex Housing Crisis) of the General Secretariat of the European Council which was published in mid-October, in the context of the preparation of the European institutions.
One has already been announced by the Commission European plan for affordable housingwhile this topic was on the agenda of the last summit of the European Council on October 23-24.
However, the trend that is developing within the technocrats of the European Council, which will be asked to take the final decisions on the new housing policy it seems to be turning its sights on the EU beyond the boundaries of housing policy, in order to address the housing crisis.
The phrase mentioned in the said report is revealing, according to which, “to solve the housing crisis, one may have to look beyond housing policy”.
And this is because, as one understands by reading the words of the report of the technocrats of the European Council, none of the housing support measures, either from the supply side (that is, through the increase of the real estate stock – which is a main concern of the Greek government, for example), or from the demand side (for example, housing allowances) is judged to be sufficiently effective, as they hide many “traps”!
What are the experts of the European Council looking at? Worth a read:
- “OR improving the quality of local areas in places currently disconnected from jobs and services could increase the supply of affordable housing and enable greater residential mobility.
- “Policies such as expansion of public transport and cycling infrastructure could further ease the pressure on urban areas.”
- “Measures to attract more local amenities to suburbs and communities around urban centers could improve the situation for low-income households pushed out of the city center.”
- “In areas with high housing costs, the best access to high quality public services it could help prevent a decline in living standards for those struggling with excessive cost burdens.”
- “Strengthening the systems social protection could help reduce the role that housing plays in guaranteeing economic security and ensure that housing remains adequate, accessible and affordable across all tenure types.”
Many “traps”, no housing solution
On the contrary, the experts of the European Council are very much lowering the bar of any expectations from purely … housing policy measures to deal with the housing crisis.
And that’s because there are many “traps”. Characteristically, their report states that “Across the EU, finding affordable housing has become increasingly difficult. Calls for more action from the EU are growing louder and a number of initiatives are being prepared. However, there are also potential pitfalls in dealing with the housing crisis and these should be taken into account.’
According to the same report, “housing debates tend to be narrow-minded”as well “tend to focus on specific groups of tenants or factors affecting housing affordability; a fact that carries the risk of overlooking important aspects of the crisis”.
In more detail:
- “In countries where home ownership is common, inflation and rising interest rates are a key driver of housing costs, significantly affecting both refinancing and new mortgage contracts. They also pose challenges for countries with strong rental markets, especially when rents are linked to consumer prices.”
- “The more home ownership is lost, the greater the pressure on rental housing markets in all countries. This has substantial long-term implications for renters in high-ownership countries, who are cut off from one of the main ways of achieving long-term financial security. Rental markets in these countries often have looser regulations, leaving renters at a higher risk of exploitation.”
Targeted aid to address energy costs for the most socially vulnerable
The interest of the technocrats of the European Council is focused on the energy reinforcement of the most vulnerable social groups and thus the reduction of the total cost of housing:
“In times of high energy prices across the EU, heating costs can also be a significant factor in housing costs, for both renters and landlords. Member States with energy efficient housing solutions such as heat pumps or district heating are less vulnerable compared to those with older housing stock and heating based on fossil fuels. Even in more prepared countries, low-income households without access to energy-efficient heating will need public support to cope with housing cost burdens. However, given housing’s huge environmental footprint, any measures to ease heating-related housing costs should be carefully considered to support sustainable solutions for those who need it most.».
Beyond energy, a solution is being sought in the direction of sharing the cost of increasing the housing stock between owners and tenants:
“Efficiency requirements to increase housing stock could be counterproductive. Instead, regulation may need to be adapted and targeted support provided to incentivize investment in efficiency across all property types, such as through measures to share costs and improve efficiency between tenants and property ownersto remove barriers to home improvements and increase affordability,” the same report states.”
National non-… solutions
From the point of view of the experts of the European Council, beyond some general directions of a European housing support policy, it is clarified that “support for policy measures is shaped by national housing systems”although none of them is judged – among them – to be sufficiently effective:
- “Homeowners are generally less supportive of housing redistribution policies such as rent controls, housing vouchers, higher taxes and social housing.”
- “Especially when local authority budgets look squeezed, homeowners seem to prioritize spending on other policy areas and may even vote against anyone (including a local lord) building new public housing.
- “Policies aimed at funding more social housing could be less popular in Member States with high home ownership rates, even if renters in these countries face high housing costs. So, even if affordable housing is widely seen as a priority, measures to address the crisis may be met with popular backlash.”
- “Mortgage and rent subsidies can help disadvantaged groups become homeowners or manage the high cost of renting, but they can also lead to over-indebtedness due to larger mortgages and drive up market rents.”
- “Targeted tax relief for first home buyers excludes those dependent on rental markets.”
- “Although rent controls are very effective at reducing rents for those living in controlled units, they also lead to higher rents for uncontrolled units, lower housing mobility, less maintenance, and reduced housing construction.”
- “Efforts to improve the energy efficiency of buildings could lead to savings on utility bills and increase the value of homes, but they could also increase housing costs in the short term because of the significant investment required to upgrade inadequate housing. Tighter sustainability regulations may slow down new home building, but could also lead to more innovation and competitiveness among construction companies.”
- “Mobilizing more private funding can be seen as an effective solution, but greater involvement of institutional investors also carries significant risks. Due to the growing affordability crisis in recent years, many countries have started to provide incentives for institutional investment in social and affordable housing through tax credits and government-funded investment instruments.