The solution to Europe’s housing affordability crisis must include building decarbonisation

The solution to Europe’s housing affordability crisis must include building decarbonisation

This analysis explores the critical intersection of housing affordability and building decarbonisation in Europe. Published by Bruegel, a Brussels-based economic think tank, the piece is authored by Ugnė Keliauskaitė, a research analyst specializing in energy and climate. The article emphasizes the urgent need for a European-wide strategy to address the escalating housing affordability crisis, which has emerged as a pressing concern at the EU level.

The article highlights that housing costs in Europe have surged by approximately 30% since 2010, while real household incomes have only increased by 20%. This disparity underscores the growing pressure on households, particularly those spending more than 40% of their disposable income on housing, which categorizes them as overburdened. Aiming to tackle this issue, the European Commission plans to unveil a European Affordable Housing Plan, set to support member states in delivering affordable and sustainable housing.

A focal point of the analysis is the role of building decarbonisation in enhancing housing affordability. Poorly insulated homes reliant on fossil fuels contribute significantly to high heating and cooling costs, exacerbating housing unaffordability. Energy-efficient renovations and electrification are deemed essential, with potential benefits including lower household energy expenses and improved access to credit for quality homes. These energy costs disproportionately affect low- and middle-income families, who often inhabit the least efficient homes.

The article suggests that revenues from the EU Social Climate Fund and the emissions trading system could be redirected to support building decarbonisation initiatives. It asserts that energy bills account for 5% to 9% of household expenditures for lower-income families, particularly in rural areas where energy costs are disproportionately high. Insulation improvements can reduce energy bills by 15% to 60%, and the adoption of heat pumps can lead to substantial energy savings, making them a more cost-effective solution compared to traditional gas boilers.

Despite the potential gains from decarbonisation, the article notes that progress has been slow. Between 2016 and 2020, only 1% of EU buildings underwent renovations annually, with a mere 0.2% achieving deep renovations. Additionally, only a quarter of buildings are electrified for heating and cooling. The European Commission aims for 60 million heat pump installations by 2030, yet sales have seen a downturn recently, with significant drops in sales reported in Germany and France.

The analysis calls for tailored policies that address the unique challenges faced by different housing types across EU countries. It highlights the necessity of financial and technical support for detached houses, as well as collective decision-making frameworks for large apartment blocks. Furthermore, it underscores the importance of making housing renovations a priority in future EU budgets to ensure the continued focus on decarbonisation.

In conclusion, the article presents a compelling case for integrating building decarbonisation into the EU's strategy for addressing housing affordability. By fostering regional cooperation and aligning social and climate policy objectives, the European Commission has the opportunity to create a more sustainable and affordable housing landscape across Europe.