Housing affordability - How can capital markets and real estate deliver Europe’s housing transition?

This resource is a video presented by Euractiv, featuring a panel discussion on the pressing issue of housing affordability in Europe and how capital markets and real estate can facilitate a housing transition. The discussion includes insights from various experts, including Stefan Moser from the European Commission, Borja Giménez Larraz from the European Parliament, and representatives from real estate and policy organizations.

Europe is currently grappling with a housing affordability crisis, with average house prices increasing by up to 60% since 2015. Many households are struggling to meet monthly housing costs. While housing policy primarily falls under national jurisdiction, the European Union acknowledges the importance of this issue for social equity and economic stability. The European Commission is working on initiatives like the Affordable Housing Initiative to support accessible and sustainable housing.

The panel highlights that residential and commercial buildings account for nearly 40% of Europe’s total energy consumption. Improving energy efficiency in these buildings could significantly reduce household expenses while supporting long-term climate objectives. However, challenges such as low coordination between EU, national, and local authorities hinder investment and the implementation of effective housing policies. A call for clearer EU regulations and stronger collaboration among member states is emphasized to foster innovative financing models and attract private capital.

The discussion touches on the necessity of strengthening public-private collaboration to scale up affordable housing supply. Questions raised include how to align sustainability objectives with the urgent need for affordable housing and the role of institutional investors in bridging the investment gap. The panelists agree that creating a stable, long-term investment environment is essential for attracting private investment.

Borja Giménez Larraz points out a significant shortfall in housing supply, estimating a need for 10 million new homes across the EU. He notes that construction has declined, with building permits falling by 20% over the last five years. Issues contributing to this decline include land scarcity, excessive bureaucracy, and rising costs of materials and labor. The report suggests reducing bureaucratic hurdles and simplifying regulations to encourage construction.

The panel also explores the importance of integrating sustainability into housing solutions. The current building stock is often inefficient, leading to high energy consumption and CO2 emissions. The need for targeted renovations and investments in energy-efficient housing is highlighted, with a focus on ensuring that such improvements do not lead to increased rents or displace existing tenants.

In closing, the discussion emphasizes the need for a multi-faceted approach to tackle the housing crisis. This includes innovative financing mechanisms, better regulatory frameworks, and a concerted effort from all stakeholders to ensure that the most vulnerable populations are not left behind. The upcoming EU housing summit aims to formalize a collaborative framework for addressing these challenges, with the goal of making housing more affordable and sustainable across Europe.