Housing in Crisis

This chapter lays out the framework of the book regarding housing and energy cost problems across Europe in the context of the youngest crisis. It sketches the key challenges of housing in Europe and deals with the selection of countries which will be used as case studies (Belgium, Denmark, Finland, France, Germany, Greece, Italy, Lithuania, The Netherlands, Norway, Poland, Portugal, Switzerland and the United Kingdom). The chapter also frames the core research questions of the forthcoming country chapters: What are the main developments of housing costs (including heating and energy cost) both concerning the self-occupation and the rental housing segment in the respective national context? What is the relevance of the national system of housing provision for current cost development? Which policy instruments are currently being used to respond to the challenge of rising costs (especially energy and heating costs) and how are they interrelated with the national system of housing provision?

This article examines the perceived housing crisis in Belgium, questioning whether the current situation is significantly worse than in the past. Despite widespread beliefs about declining housing affordability, data suggests that affordability risks have not increased over the last decade. The study highlights that while house prices have risen, these increases are less pronounced when adjusted for inflation and housing quality, and can largely be explained by changes in interest rates, household incomes, and fiscal benefits, all of which have strengthened purchasing power. The article also explores regional differences in housing markets and policies, noting that Brussels, Flanders, and Wallonia each face unique challenges. Key issues include the high energy consumption of Belgium’s relatively old housing stock and the significant affordability problems faced by low-income tenants. The article concludes that while the general perception of a housing crisis may be overstated, targeted policies are essential to address the specific needs of vulnerable groups and improve housing quality and energy efficiency across the country.

The last two decades have brought several societal crises to Denmark, affecting the housing market in different ways and to different degrees. First the financial crisis, then the COVID-19 pandemic and, most recently, increasing inflation and energy prices, partly due to the war in Ukraine. This chapter focuses on the recent decades of development of housing in Denmark and the consequences of these crises. The chapter highlights how location (rural/urban) and housing tenure (tenant/owner) influence how crises are experienced and can be dealt with by households. The Danish housing market is made up of four very different sectors: owner-occupied housing, cooperatives, private rental housing and non-profit rental housing. The crises have affected the sectors and their inhabitants differently with a key dividing line between tenants and owners. However, the sectors also contain substantial internal differences, not least depending on location in relation to an urban–rural divide. The major cities are soaring in demand and price levels, whereas rural locations are struggling with vacancies and lack of investments. The public discourse in Denmark speaks of a risk of the country breaking into two. In the housing market, this unfortunately seems like a realistic risk.

Economic shocks in Europe differ depending on geography, institutions and socio-economic structures. During 2008–2023, average GDP growth in Finland was slightly above zero per cent, and in October 2022, the country turned into recession and housing markets and construction collapsed. There are three shocks that we consider as explanations. The COVID-19 pandemic had negative effects on service sectors, and it led to an increase in remote working, but they do not explain the crisis. The same applies to energy crisis and hindrances of trade caused by Russia’s attack on Ukraine. Heating in urban areas is based on centralized facilities using a variety of other raw materials than gas and coal. The greatest impacts came from the ECB’s monetary policy. Low interest rates and credit expansion kept housing prices in slight increase. In June 2022, the ECB’s interest rate hikes started as inflation took off and soon housing markets in Finland collapsed. The Eurozone has a single currency, but many markets for finance. In Finland, about 90 per cent of loans for housing and small and medium size firms have variable interest rates updated in 12 months or shorter intervals. The main cause for the current economic and housing crisis in Finland was the huge increase in interest expenses.

Over the last twenty years or so, the production of new housing in France has reached a high level, combining strong activity in the segments of home ownership and rental housing, supported by a diversified range of public aides on both the supply and demand sides. Despite an overall improvement in the quality of housing and a significant supply, households have felt the impact of rising costs. Inequalities in access to housing and indicators of poor housing for some households have highlighted the ever-increasing need for social or affordable housing. The sudden rise in interest rates has led to a downturn in the credit market, with transactions falling in both existing and new-build properties, accentuated by a fall in public aids. Against this uncertain backdrop, with government funding under severe constraints, a number of issues need to be addressed: boosting supply for all households, meeting the specific needs of households experiencing difficulties in accessing and remaining in quality housing and above all improving the housing stock in the long term to meet environmental requirements.

Germany is a special case in terms of housing in Europe. Its housing system features a large share of renters and a distinct housing stock due to the Second World War. The development of housing costs is a dominant topic in the public debate as well as rising energy costs are also being intensively discussed, particularly with regard to their impact on low-income households. The chapter describes current cost development in housing both for people buying and renting and takes a look at different developments regarding settlement structures. It also addresses analyses of the causes of cost development, which are manifold (demographic developments, population growth, financing structures, land prices, construction costs, and heating costs). It further sketches the housing policy instruments used in Germany and how they have been reformed in recent years in order to counter the rising cost of housing and energy prices. The chapter concludes that a large portion of government activity is related to the renting tenures, but that also owner-occupants are affected by the crisis.

This chapter examines housing cost trends and the growing unaffordability crisis in Greece, situating these within structural changes of recent decades. It provides an overview of the Greek housing system, including tenure structure and property distribution, the impacts of the debt crisis and austerity policies, the condition of the residential stock and housing politics. Housing inequalities and wealth concentration have increased since the crisis, driven by the hollowing out of intermediate social strata and the redistribution of property ownership. Tourist-led housing demand, short-term rental expansion and the entry of institutional and financial actors alongside foreign investment in the housing stock are identified as key drivers of unaffordability. Greece’s market-dominant, homeownership-oriented policies—implemented in partnership with the private sector and focused primarily on subsidies—have had limited impact on reversing exclusionary trends. Although homeownership remains the prevailing social aspiration and access to housing is provided solely through market mechanisms, the chapter calls for a shift towards a rights-based housing model, emphasising the need for social, decommodified housing and regulatory reforms to achieve a more equitable housing system.

This chapter unpacks the composition of housing costs in Italy, shedding light on the main trends in house prices, utilities, and affordability over the last twenty years. It shows that the overburden of housing costs is more severe for private tenants, urban singles, and households at the bottom of the income distribution, highlighting widening divides across tenure, household typologies, and income levels. These disparities are largely shaped by the ambiguous approach of public policies in the field of housing, characterized by inertia when it comes to promptly addressing emerging challenges, and disregard for any notions of redistribution when actions are taken. The chapter illustrates this ambivalence by examining several post-pandemic interventions designed to alleviate housing costs, including incentives for energy retrofitting and rent allowances.

This chapter is aimed to explore the developments in the housing cost in Lithuania and the housing policy instruments that are being used to mitigate the challenges of rising costs (including energy and heating costs). The focus is on the period from 2018 to 2023. This period witnessed fast economic growth, which was interrupted by the COVID-19 pandemic, and was further impacted by the rising energy prices caused by the full-scale war in Ukraine.

The findings indicate that even though housing costs for both homeowners and tenants have increased significantly over the period, these increases have been mitigated by the rise in disposable income in many households. The increase in housing costs was largely due to the rise in energy resource prices, general inflationary processes, and the housing acquisition market's dynamics.

This chapter shows that housing costs in the Netherlands are increasing, because of a shortage of dwellings on the market and the recent increase in inflation. Aiming to tackle the housing market crisis for those households who are losing out has led government to work toward re-claiming control over the housing market, after control had increasingly no longer deemed needed in the past two decades and government had retreated. The chapter shows that the households concerned in terms of housing affordability and accessibility are among others the low- and middle-income households, the young, the first time buyers, and the private tenants in rental dwellings with an unregulated rent. The housing market problems, therefore, reached the top of the societal and political agenda in the past few years. Government led on negotiating solutions to facilitate new construction and the realization of new units, while temporarily re-controlling rents in the private rental sector.

In this chapter, we analyze the housing costs of Norwegian tenants and homeowners in the years of the energy crisis and the new age of inflation. Based on data from Statistics Norway, we show that the housing costs of homeowners increased the most in absolute and relative terms in the new age of inflation that started in 2022. However, as tenants make up a large share of low-income households, economically vulnerable tenants were probably the hardest hit by the housing cost crisis. We also discuss the drivers of increasing housing costs and examine the policy responses of the national government. The main policy responses of the government were the temporary electricity subsidy covering all households and adjustments to the targeted housing allowance scheme. These policies were arguably both consistent with the fiscally generous universal traditions of Nordic welfare states and the liberal Norwegian housing system. In the last part of the chapter, we summarize our argument and ask if there is a need to combine temporary emergency measures with a long-term government strategy to boost construction rates and affordability. Without a realistic government plan to boost construction rates the next housing cost crisis may hit Norwegian households even harder.

The aim of the paper is to characterize the legal and factual situation of the housing stock in Poland, present the cost of purchasing or renting a dwelling, with consideration given to costs of utilities, and to identify the current housing policies. We show that housing problems concern the inadequate size of dwellings in relation to the households that occupy them and the access to dwellings by less affluent persons, who face high market rents and high purchase prices. The needs of lower income groups, elderly citizens, or those who need greater mobility to find employment have still not been met. The social rental sector (at cost rents) has no available, vacant units. Governmental programmes which support both construction and renovation activity in this sector have been put in place and their implementation is an important step in the right direction. In conclusions, we summarize the existent challenges on the housing market and assess the manner in which they are being addressed.

The housing crisis has become a major challenge across Europe, with certain countries disproportionately affected—Portugal is among the hardest hit and ranks among the most vulnerable EU countries in terms of energy poverty, primarily due to the prevalence of poor-quality housing requiring higher energy consumption to meet basic needs. Using data from the Household Finance and Consumption Survey and EU statistics on income and living conditions, supplemented by other data from the Bank of Portugal and Instituto Nacional de Estatística, the chapter uses standard indicators to describe the main features and effects of the housing crisis in Portugal, as well as the main housing policy measures developed to respond to it. The country has experienced significant changes in its housing system, particularly in terms of tenure, affordability and deprivation, driven by rising housing costs and high energy and heating costs that impact low-income families and young people in particular. This research contributes to housing policy in three keyways. First, it offers an assessment of the link between energy and heating costs and the housing crisis in Portugal. Second, it highlights the limited effectiveness of recent policy measures in mitigating the crisis. Finally, it provides insights for other Southern European countries with similar housing systems, broadening the understanding of the wider implications of energy costs within the housing sector.

Over the last decades, the Swiss housing market has been characterized by a strong demand, mainly due to rising population, socio-demographic changes, income growth and favorable mortgage conditions. As the housing supply of the country is considerably constrained by topographic and regulatory constraints, this has led to sizeable rent and even larger price increases well outpacing inflation. Overall, policies aiming to improve housing affordability remain scarce. Policies implemented to counter skyrocketing housing prices in the owner-occupied market depress housing demand by making credit conditions less favorable and by regulating specific segments of the market. Policies aiming to improve the affordability of the rental market mainly consist of a mild form of rent control and the supply of social housing to lower-income households. To date, energy price increases stemming from international political instability do not seem to have significantly contributed to a rise in periodic housing costs. Even though Switzerland strongly depends on energy imports, the income share that Swiss households spend on energy has remained stable because of a reduction in consumption. However, existing energy policies will not shield Swiss households from potential future energy price hikes in the international markets.

A crisis is a short-term or immediate event. In the housing sphere, the concept seems to apply differently. The UK’s housing problems have built up over a long time and will also be resolved, if done effectively, over a lengthy period. Housing is technically complex and is structured by systemic lags and inelasticity. Arguments are highly ideologically situated. These are the classic sources of wicked problems and perhaps that is a better way of thinking about the housing crisis in the UK. Unaffordability, lack of access to home ownership, unplanned growth of private renting, insufficient affordable housing options, growing homelessness and wider shortages of housing—particularly for non-market housing—are chronic problems patterning the UK’s housing system. Housing strategy and policy designed to deal with these issues are often incoherent and uncoordinated. This chapter will examine housing costs by tenure and geography and focus on the drivers of those costs and their variation. We distinguish between external shocks, the cost of living crisis and internally generated adverse housing processes and outcomes. We also identify major policy failures at the root of our housing problems.

This chapter draws comparative conclusions across all 14 case study countries presented in the edited volume (Belgium, Denmark, Finland, France, Germany, Greece, Italy, Lithuania, The Netherlands, Norway, Poland, Portugal, Switzerland and the United Kingdom). It consists of a general overview on the developments for housing and energy cost across the countries involved in this volume. During the analysis, different patterns of development dealing with different temporal dynamics, relevance of cost components as well as tenure and spatial aspects will be described. The chapter also presents a comparative overview over government policy responses within the different realms. After the two descriptive parts, conclusions will be drawn and an outlook for future EU action in housing policy will be sketched.