Context and Background
This document, published by the EU's Policy Department for Economic, Scientific and Quality of Life Policies, addresses the pressing issue of housing affordability in the European Union (EU). It was created at the request of the Employment and Social Affairs Committee (EMPL) and features contributions from authors Dovydas Caturianas, Piotr Lewandowski, Jakub Sokołowski, Zuzanna Kowalik, and Egidijus Barcevičius. The study aims to analyze the current situation regarding affordable housing and propose actionable recommendations for policymakers at both national and EU levels.
Key Findings on Housing Affordability
Affordable housing has emerged as a critical area of focus within housing policy across many EU Member States. Although the EU lacks direct control over housing policy, it can influence housing conditions through regulations related to state aid, fiscal law, and competition law, as well as through soft law measures like guidelines and recommendations. The document provides a comprehensive overview of housing trends, challenges, and best practices across Member States, highlighting the significant disparities in housing affordability.
Statistics on Housing Cost Overburden
The most common measure of housing affordability is the housing price-to-income ratio, with Eurostat defining the housing cost overburden rate as the percentage of the population spending 40% or more of their disposable income on housing. From 2010 to 2018, the EU-27's average housing cost overburden rate remained stable at around 10%. However, substantial differences exist between countries; lower rates are seen in Northern Europe and Central and Eastern European countries, while higher rates are reported in Germany, Denmark, Bulgaria, and particularly acute in Greece and some Balkan nations.
Deteriorating Conditions for Low-Income Households
Recent trends indicate worsening housing affordability, especially for low-income homeowners and private renters. In 2018, nearly 38% of households at risk of poverty spent over 40% of their disposable income on housing, compared to just 10.2% of the general population. The document notes that the lack of a universal definition of homelessness in the EU complicates the assessment of homelessness rates, which have reportedly risen over the past decade due to escalating housing costs and austerity measures that have curtailed social programs.
Financialization of Housing
One of the principal factors contributing to rising housing costs is the financialization of housing, which transforms it into a commodity linked to broader financial markets. This has led to increased secondary property ownership as an investment strategy, exacerbating local housing prices and reducing homeownership rates. Additionally, the rise of short-term rental platforms like Airbnb has further diminished housing availability for local residents, contributing to gentrification and increasing costs.
Policy Recommendations
The document outlines a trend of decreasing public expenditure on supply-side housing measures, like the development of social and affordable housing, while demand-side measures, such as social welfare payments, have increased. Experts argue that demand-side policies often inflate local housing prices rather than enhance affordability. In contrast, recurring immovable property taxes have gained popularity among EU Member States as effective tools to combat housing speculation and increase housing supply.
EU Initiatives and Soft Power
While the EU lacks direct housing policy authority, it employs soft power through administrative measures, recommendations, and guidelines for local policymakers. Recent initiatives include Principle 19 of the European Pillar of Social Rights, which addresses housing and assistance for the homeless, and the Housing Partnership Action Plan, proposing substantial actions for affordable public housing. The European Social Fund (ESF) and projects funded by the European Regional Development Fund (ERDF) have positively impacted housing access and quality for vulnerable groups across European cities.