House prices have been breaking records in Europe month after month since the continent overcame the financial crisis. In the last decade, all the countries of the European Union have experienced price increases due to different causes, but which have turned housing into one of the main challenges for governments and which has crept into the agenda of the future. European Commission, which for the first time will have a Commissioner for Energy and Housing.
In Spain the conflict has reached the streets with a massive mobilization in Madrid two weeks ago and a camp in Valencia in recent days due to a situation that is beginning to be practically unsustainable, since prices have skyrocketed by 67% in recent days. years. According to data compiled by Eurostat, the increase in prices in Spain is slightly above the European average (58%) and of the large companies it is the worst off. The situation has led Pedro Sánchez to say that the matter is the Government’s “absolute priority.”
However, the problem is common for European citizens, who place housing as the fourth thing they face, behind the increase in the cost of living – which is closely related -, the economic situation and unemployment, and health. , according to a Eurobarometer survey published in March. Housing, with 20%, surpasses climate change and education and scores seven points on immigration, which is the big issue that the extreme right has clung to, dragging most governments towards harder positions in politics. migratory. The threat now is that that vote will be fueled by the housing crisis. When voting, however, the issue was especially taken into account for the Spanish electorate, but not so much for the European average.
“The main factors that have driven the rise in real estate prices in recent times are the increase in construction costs and mortgage rates, which have contributed significantly to the rise in housing prices. In addition, there has been a notable decline in construction activities, which has limited the supply of available properties. Finally, there has been an increase in the purchase of property as an investment strategy,” explains Elizabeth Kuiper, associate director of the European Policy Centre.
For Hans Dubois, research director at Eurofound, the problem lies in “supply and demand” due to issues such as tourism, demographic changes – mainly due to the move to urban centers – or the large number of empty homes that he attributes to good measure to large investors. The rise in interest rates has also had an influence. “There is a housing problem in all Member States, but it is a little different in each country,” adds the co-author of the report ‘Housing in Europe: unaffordable prices and inadequate quality’.
In countries like Hungary or Lithuania, the housing price rise graph resembles a practically vertical staircase. Portugal has also experienced a significant rise in prices in recent years, which has placed it at the top of the European ranking, which, according to a study by the European Commission, “are overvalued in more than half of the countries in the area.” euro”.
“High demand and lack of supply seem to be the main drivers of price increases,” Kuiper reflects on the special increase in those countries, “while in countries like Portugal, prices in metropolitan areas have risen more than in cities. rural areas.” For his part, Dubois adds the factor of incomes, which have increased in countries like Hungary. However, the price of houses has increased by 248% in the last ten years compared to 67% of salaries.
In the vast majority of European countries, housing prices have grown substantially more than salaries, except in Romania, where the former have grown by 58% and the latter by 124%. Italy, Finland and Cyprus are in the same situation, although with a smaller margin.
“Disposable family income increased much less than housing prices,” reflects Dubois, who emphasizes that, beyond the price of housing itself, the crisis is worsening due to the increase in the costs of services, such as energy. , which is one of the problems pointed out in the case of Spain. “Measures such as improving insulation, heating systems or installing solar panels are not only good for the environment, but also for the affordability of housing,” says the researcher.
The consequences of the housing crisis are wide-ranging: from mental health problems to an increase in homelessness. From an economic point of view, the studies also point to a decrease in aggregate demand or a lack of labor in some sectors, as is happening in Amsterdam with the shortage of teachers or police officers, according to the Eurofound study. .
Although housing is a national competence (and in the case of Spain it depends largely on communities and municipalities), the issue has escalated to the EU, since it has become a common conflict. The president of the European Commission, Ursula von der Leyen, took the glove of the socialists and has assigned the matter to a specific commissioner, who will assume the Housing and Energy portfolios. Among its responsibilities, it has been tasked with, among other things, creating an investment platform for affordable housing and promoting changes in the State aid system to boost investments in public housing. In the latter, which is normally a tool to promote the industry, he will work with the Vice President of Competition, Teresa Ribera.
“The proposed European Affordable Housing Plan is an opportunity to address the housing investment gap in the EU, but to ensure that the plan promotes affordable and sustainable housing solutions, concrete actions and robust implementation frameworks are essential,” says Kuiper, which remembers that, as the causes of the problem are varied, the solutions are also “multiple”.
And that is where the European governments are, who have launched different initiatives. Sweden has controlled rental prices for decades and Germany imposed a maximum reference price. The Netherlands and Romania penalize empty homes. A Belgian law allows empty properties to be requisitioned for social rental and the municipal governments of the capital have begun to make use of this prerogative. In addition to social housing, in some cases specific aid is given, such as mortgages, or tax deductions are applied.
Dubois questions some of those measures. Rent control, for example, is considered to reduce mobility and can be a barrier for people new to the market. Regarding subsidies for mortgages, he considers that it may be “politically attractive”, but that it leads to an increase in these contracts and an “over-indebtedness”. “The banks may like it, but it is not good for lowering prices,” he explains.
And what is the solution? “The slower response is to build more housing, but that takes time. The quickest responses are the rehabilitation of homes, which also discourages keeping them empty, and improving services in some areas where housing is not so expensive, but which are not connected to employment opportunities,” advises Dubois.
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