Housing affordability and poverty in Europe: on the deteriorating position of market renters

The article, published by Cambridge University Press, addresses the pressing issue of housing affordability and poverty in Europe, focusing particularly on the deteriorating position of market renters. Authored by Rod Hick, Marco Pomati, and Mark Stephens, it draws on data from the EU Statistics on Income and Living Conditions survey to analyze trends in housing affordability from 2010 to 2018.

Recent studies by Housing Europe and the OECD indicate a general deterioration in housing affordability across Europe, especially affecting specific groups like renters and low-income households. The paper aims to explore the incidence and determinants of housing affordability in a comparative European context. It reveals that while overall affordability measures show stability, the risks of affordability problems have increasingly concentrated on market renters.

The article emphasizes that unaffordable housing significantly impacts families living below or near the poverty line, as housing costs often represent the largest portion of a household's budget. Low-income households disproportionately spend a significant share of their income on housing, raising concerns that deteriorating affordability could intensify poverty.

The authors examine various measures of housing affordability and how they relate to socio-economic characteristics. The findings indicate that despite rising house prices, the overall affordability ratios have remained relatively stable across most European nations from 2010 to 2018, countering claims of widespread deterioration.

The paper also highlights significant country-level variations in housing affordability issues, linking them to factors such as GDP per capita and the at-risk-of-poverty rate. Notably, coverage of housing allowances and the stringency of rent regulations play essential roles in influencing affordability problems on a national scale.

Using household-level microdata from the EU Statistics on Income and Living Conditions (SILC) dataset for twenty-seven European nations, the researchers analyze trends in housing affordability through a multifaceted approach. They include various costs associated with housing, such as mortgage payments and utility bills, while considering household income.

The study reveals that while market renters face increasing affordability challenges compared to mortgaged homeowners, the average affordability ratios have not deteriorated significantly during the study period. The authors conclude that economic variables, particularly GDP per capita, are stronger predictors of housing affordability issues than housing-specific factors.

The findings prompt a call for policy interventions, particularly focusing on the needs of market renters. It suggests that stronger rent regulations and increased housing allowances could alleviate affordability issues, especially for low-income households.

In summary, the article provides a comprehensive analysis of housing affordability and its implications for poverty in Europe. It highlights the need for a nuanced understanding of the relationship between housing costs and socio-economic factors while suggesting potential policy actions to address the challenges faced by market renters.