Social and affordable housing in Europe: A market gap analysis

The document titled "Social and affordable housing in Europe: A market gap analysis" is published by the Council of Europe Development Bank (CEB), a multilateral development bank dedicated to social development across its 43 member countries. The CEB focuses on financing investments and providing technical assistance in sectors such as education, health, and affordable housing. The analysis is authored by Leonardo Porta and Florian Meyerhoefer from the CEB Loans & Social Development Department, highlighting the pressing need for affordable housing solutions across Europe.

The analysis reveals significant regional disparities in the social and affordable housing markets across Europe. Northern Europe, characterized by high demand and low vacancy rates, faces affordability challenges, particularly in urban areas. Conversely, Southern Europe struggles with economic stagnation, which hampers housing investment, while Central and Eastern Europe experiences low construction activity and housing deprivation. The report emphasizes that tailored policy interventions are essential to meet the specific needs of each region, focusing on the creation of affordable housing and preventing the displacement of low-income groups.

The COVID-19 pandemic has had a profound impact on the housing market. It has exacerbated existing inequalities, particularly between economically strong Northern Europe and other regions. Although government support measures were implemented to mitigate the crisis, they have highlighted the need for long-term strategies aimed at ensuring housing stability for vulnerable populations. The report indicates that low interest rates during the pandemic initially made housing more affordable; however, this trend disproportionately benefited higher-income individuals, leaving low-income households further behind.

The analysis identifies critical market gaps in housing supply and demand across Europe. Between 2012 and 2019, many renters faced affordability issues, with lower-income households spending a larger percentage of their income on housing. In nearly three-quarters of the analyzed countries, about half of the lowest income quintile tenants were overburdened, paying at least 40% of their disposable income on rent. The report emphasizes that these gaps necessitate targeted interventions in housing policies and funding.

To address these challenges, the CEB has undertaken various projects aimed at bridging housing gaps. Initiatives include providing affordable housing for displaced persons from Ukraine in Poland and supporting social housing projects in Germany. The report highlights that international financial institutions play a crucial role in creating inclusive housing markets, which promote social cohesion and address housing deprivation effectively.

The document concludes by recommending several priority areas for intervention to enhance the housing market across Europe. These include creating and preserving dedicated affordable housing units, aligning housing supply with local conditions, improving access to private market homes for low-income households, and protecting against displacement. The CEB's initiatives serve as practical examples of how targeted investments can address urgent housing needs, stabilize communities, and foster inclusive growth.