Policies to Ensure Access to Affordable Housing

This study, commissioned by the Policy Department for Economic, Scientific and Quality of Life Policies at the European Parliament, delves into the pressing issue of housing affordability within the EU. Authored by Dovydas Caturianas, Piotr Lewandowski, Jakub Sokołowski, Zuzanna Kowalik, and Egidijus Barcevičius, the research aims to provide a comprehensive overview of the current housing situation, identify key trends, and propose actionable recommendations for policymakers and stakeholders.

Affordable housing is increasingly recognized as a critical area of housing policy across EU Member States. Despite the EU lacking direct control over housing policy, it influences housing conditions indirectly through various regulations, including state aid law and fiscal law. The study systematically assesses the current landscape of housing affordability, revealing significant disparities among Member States regarding the proportion of households spending over 40% of their disposable income on housing.

The report highlights that the average housing cost overburden rate in the EU has remained stable at approximately 10% from 2010 to 2018. However, substantial differences persist, with Northern and Central Eastern European countries generally facing lower housing cost burdens compared to nations like Germany, Denmark, Bulgaria, and Greece, where the issue is particularly acute. Alarmingly, nearly 38% of households at risk of poverty in 2018 were spending more than 40% of their income on housing, starkly contrasting with the 10.2% of the general population.

The housing affordability crisis has intensified, especially for low-income owners and private renters. The study notes a deterioration in housing conditions, with rates of homelessness increasing in several EU countries over the last decade. The rise in housing costs is attributed to various factors, including economic crises, austerity measures, and ineffective policies addressing homelessness.

A critical factor in the rising costs and decreasing affordability of housing in Europe is the "financialization" of housing, which turns homes into financial assets. This trend has increased reliance on general financial markets, particularly for mortgages. Moreover, secondary property ownership has emerged as an investment strategy, further driving up local house prices and diminishing homeownership rates, particularly in areas with slow housing stock responses.

Another significant trend affecting housing prices is the rise of collaborative economy platforms such as Airbnb. These platforms shift properties from local residents to short-term accommodations, exacerbating the housing crisis and contributing to gentrification in urban centers.

The study reveals a trend of decreasing public expenditure on supply-side housing measures, such as developing social and affordable housing, while demand-side measures, like social welfare-type payments, have increased. Experts argue that demand-side policies often lead to higher local housing prices rather than improving affordability for lower and middle-income households. In contrast, recurring immovable property taxes have gained popularity as effective tools to combat speculation and increase housing supply.

While the EU lacks direct authority over housing policy, it employs "soft power" through recommendations and guidelines. Recent initiatives, including the European Pillar of Social Rights and the Housing Partnership Action Plan, aim to enhance access to affordable housing. The European Social Fund has positively impacted vulnerable groups' access to housing, while the European Regional Development Fund has focused on improving housing quality and energy efficiency.

In conclusion, this study underscores the urgent need for coordinated action at both EU and national levels to address the multifaceted challenges of housing affordability and ensure equitable access to decent housing for all EU citizens.