Across Europe, the financial sector has pushed up house prices. It’s a political timebomb

This article from The Guardian discusses the ongoing housing crisis in Europe, emphasizing the detrimental impact of the financial sector on housing affordability and availability. Authored by Tim White, a research fellow at Queen Mary University of London and the London School of Economics, the piece highlights the growing discontent among the working and middle classes, as well as the rising political disenfranchisement tied to the housing issue.

The financial sector has significantly influenced housing prices across Europe, with major cities experiencing soaring rents that consume up to half of residents' incomes. In various urban centers, median rent has increased by over 10% year-on-year, pushing many into precarious living conditions and contributing to a rapid rise in homelessness. The mayor of Barcelona, Jaume Collboni, even stated that the housing crisis poses a threat to the EU comparable to that of geopolitical challenges.

Institutional investors have increasingly dominated the housing market since the 2008 financial crisis, managing approximately $1.7 trillion in global real estate by 2023, a dramatic rise from $385 billion in 2008. This shift has been fueled by loose monetary policies, which have turned housing into a lucrative asset class for private equity firms, insurance companies, and pension funds. In Ireland, nearly half of new housing units delivered since 2017 were purchased by investment funds.

While the financial sector profits, ordinary residents face escalating housing costs, reduced security, and deteriorating living conditions. Investment funds often prioritize shareholder returns, leading to practices such as "renoviction," where renovations are used as a pretext to hike rents. For instance, Blackstone raised rents by up to 50% on properties they acquired and renovated in Stockholm. Such actions have exacerbated inequality and disproportionately affected marginalized communities.

The roots of this crisis can be traced back to decades of housing market privatization and liberalization. Public housing was sold off to private investors, eroding the role of welfare states in providing housing. This trend has been exacerbated by demand-side interventions that fueled speculation and increased household debt, culminating in the 2008 financial crisis, which presented new opportunities for investors to acquire distressed assets at low prices.

The housing crisis has become a focal point for political mobilization across Europe, with large-scale protests demanding affordable housing solutions. Some governments, like Denmark and the Netherlands, have introduced policies to deter speculation, but the financial sector continues to wield significant power, often lobbying against regulations that threaten their profits. Despite popular support for measures such as socializing apartments owned by large landlords, political will to implement such changes remains weak.

The article concludes that the current system of financial capitalism has failed to provide adequate housing solutions, prioritizing profit over social need. The evidence indicates that as investors gain more control, the needs of residents are systematically undermined. With housing at the forefront of political discourse, there is a pressing need for fundamental changes that can reclaim homes from financial interests and re-establish housing as a public priority.