Housing in the EU: The EU as a Commodifying Force

This resource titled "Housing in the EU: The EU as a Commodifying Force" is published by the Institute for International Political Economy Berlin and authored by Jonathan Sidenros. The working paper examines the role of the European Union (EU) in the ongoing housing crisis across its member states. Despite significant attention on the EU's influence in various welfare sectors, housing remains relatively underexplored. The study employs Aalbers' theory of housing financialisation along with Scharpf's theories of EU integration to analyze four modes of housing financialisation: mortgage debt, mortgage securitization, financialisation of rental housing, and financialisation of social housing companies.

The study reveals that the EU has contributed to the commodification of housing through various mechanisms, including mortgage market liberalization, fiscal regulations, monetary policy, and competition law. Over the last decade, average rents in the EU have risen by 19%, while house prices have surged by 47%, significantly outpacing wage growth. The European Parliament has reported a 70% increase in homelessness, with over 700,000 people affected. Furthermore, the estimated number of homeless individuals in the EU stands at approximately 895,000, highlighting the severity of the crisis.

The EU's housing crisis is characterized by inflated housing costs exacerbated by energy inflation and rising living expenses. Reports indicate a troubling trend of adults living with their parents, signaling increased financial strain on younger generations. The study points to rising gentrification, segregation, and suburbanization in European cities, further complicating the housing landscape. The EU introduced the Urban Agenda in 2017 to combat housing exclusion, reaffirming its commitment to housing as a human right as articulated in various EU treaties.

The research employs a comprehensive literature review, analyzing existing studies on the EU's influence on housing commodification and financialisation. The methodology includes a systematic review of academic sources, focusing on legislation and policy changes that impact housing. The study emphasizes that while the EU lacks formal legal authority over housing policy, it exerts significant influence through its financial and economic regulations.

The paper integrates the theories of financialisation and housing commodification, drawing upon both Marxian and Polanyian perspectives. It conceptualizes housing as a "fictitious commodity," essential for social reproduction and human well-being. The findings suggest that the commodification of housing is both a driver and a product of the EU's political economy, complicating efforts to uphold housing as a fundamental human right.

The paper outlines how EU policies have facilitated the rise of mortgage debt and securitization, resulting in increased financial pressures on households. The Capital Markets Union initiative aims to consolidate cross-border mortgage markets, further contributing to the financialisation of housing. The research highlights that these policies often favor market-oriented solutions over social commitments, leading to a decline in public social housing.

In conclusion, the study underscores the EU's role in fostering housing commodification against its commitments to social inclusion and human rights. The findings suggest a need for a re-evaluation of EU policies to promote sustainable housing solutions that prioritize social equity over market dynamics. The research advocates for the necessity of de-commodifying housing policies to mitigate the adverse effects of financialisation and ensure equitable access to housing across Europe.