A report published by the British newspaper, “Financial Times”, stated that the level of dissatisfaction with housing costs has reached its highest levels ever in various rich countries, surpassing other concerns related to, for example, health care and education.
The newspaper reported that according to the figures of a poll conducted by Gallup Analytics, an American analysis and consulting company, the following:
- Half of respondents in OECD countries are dissatisfied with the availability of affordable housing, a sharp increase since central banks raised interest rates to tackle the worst of the inflationary crisis.
- In Europe, housing is still more expensive than it was before the pandemic — and that’s taking into account higher borrowing costs.
- In the United States, home prices have risen despite higher interest rates, and nearly 60 percent of survey respondents in the world’s largest economy said they were dissatisfied with the inventory of affordable housing.
- At the same time, rents have risen at a time when high prices for other basic goods, such
as food and fuel, have reduced disposable incomes.
The newspaper explained that the researchers partly blamed the lack of new home construction for the affordability crisis.
“Basically, we haven’t built enough,” Willem Adema, a senior economist at the OECD’s social policy division, told the newspaper, adding that developers often target wealthier households, exacerbating pressures on low-income earners.
“Population trends can move much faster than you can change the supply of housing,” said Andrew Wishart, an analyst at Capital Economics.
The newspaper expected that discontent over housing would play an important role in this year’s elections, especially in the United States, where voters head to the polls in November.
The newspaper pointed out that the average home price is now about 38 percent higher than it was when US President Joe Biden took office in January 2021, according to the Case-Shiller Home Price Index.
Research by the Joint Center for Housing Studies at Harvard University showed that the monthly housing payment on an average-priced home with a low-deposit loan, which is preferred by first-time buyers, is now $3,096 – compared to around $2,000 in January 2021, she added.
According to Harvard University, many current homeowners have 30-year mortgages with very low interest rates, and are generally paying a lower percentage of income toward debt service than at any time since 1980.
The Gallup data, based on responses from more than 37,000 people in the 37 rich-country club of the Organisation for Economic Co-operation and Development, shows that discontent over housing affordability is highest among those under 30 and those between 30 and 49, many of whom may be trying to get on the property-buying ladder.
Some 44 percent of people over 50 expressed dissatisfaction with their housing in OECD countries, but the figure rose to 55 percent among those under 30, and 56 percent among those aged 30 to 49.
According to official statistics, in England, house prices are now eight times the average annual wage, more than double the rate seen when the last Labour government came to power in 1997, and the number of households living in temporary accommodation in England has reached an all-time high.
In rich countries, about 30 percent of the population is dissatisfied with health care, education and public transport, and dissatisfaction with the standard of living is expected to rise slightly in 2023, from 24 percent to 25 percent.
The Gallup World Poll is compiled annually, and the 2023 survey is based on responses from 145,702 people in 142 countries and is weighted by population. Respondents are asked about a range of social, economic, and political issues.
Some countries where 2024 data is already available have shown a further increase in housing dissatisfaction this year, the paper explained:
- In Germany, the proportion of people dissatisfied with the availability of affordable housing rose to a new high of 46 percent, up from 42 percent in 2023 and more than double the levels until 2012.
- In Spain, the percentage of people dissatisfied with their housing rose to 62 percent in 2024, the highest rate since the financial crisis.
Causes and solutions
From London, British real estate expert Jonathan Rowland, in exclusive statements to the Sky News Arabia Economy website, attributed the reasons behind the rising concerns about housing costs in rich countries to several reasons, which are:
Various factors such as population growth, international students, regular immigration and asylum applications have increased demand for rentals and home purchases.
-Planning: A slow system and lack of local support means that many housing projects are never built.
– Stable areas: Unlike developing countries, land is often scarce or protected, and planners are reluctant to allow new construction near historic areas unless it is compatible, which causes construction costs to rise.
-Environmental concerns: Homes must be energy efficient and not significantly impact local nature, which increases construction costs and land shortages.
– Shopping centres: Often there are enough homes but in inappropriate locations. This is partly due to the removal of factories and shopping centres and their relocation away from population centres in some areas.
He stressed that there are many solutions that countries can resort to to get out of this crisis, but they may be costly and politically unpopular, including:
- Creating job opportunities in areas where factories have been removed.
- Increase taxes on large, limited-use homes to encourage their sale.
- Build more houses that councils can rent to poor people.
- Developing unused commercial sites such as shopping malls and factories.
- Building entire new cities between urban centers.
Regarding his expectations regarding the housing market in light of these concerns, he ruled out any change in the situation in the short term, explaining that the problems took decades to form and will take more than a decade to correct, expecting that prices and rents will continue to increase at a slow pace but will still exceed the general inflation rate, while in the long term, he stressed that nothing will change to improve the situation unless governments take action.
Real estate market balance
Also from London, economic expert Anwar Al-Qassim said in exclusive statements to the Sky News Arabia Economy website that the world has begun to witness a wider housing crisis, which represents one of the biggest challenges facing future generations.
He explained that this crisis, in turn, raised rental prices by 20 to 80 percent over the past five years, attributing the reasons to the following:
- The sharp rise in the prices of raw materials and building supplies has contributed to the rise in housing costs not only in rich countries but also in poor ones.
- The high cost of lending by banks, the high interest rates and the weak general economic growth in most countries of the world also contributed to the sharp decline in construction, which ultimately affected the global housing boom.
He expected that the housing market would remain subject to changes in lending policies followed by banks, in addition to responding to the reduction in inflation, which requires reducing interest rates on lending.
He stressed that the intervention of countries is required to overcome this stage, similar to what China did to save major construction and building companies that almost caused an economic crisis in China and the international market.
He stated that achieving balance in the real estate markets requires a long time, which in turn affects the ability of future generations in rich countries to own homes, which will weaken the economic cycle and lead to external migration factors between these countries, citing as evidence that more than one poll conducted in Britain, for example, showed that half of the British people want to immigrate to countries such as Australia, New Zealand, Canada, Spain and others.
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