Soaring costs across the EU\u00a0are pricing out renters, deterring prospective buyers and preventing new homes from being built.\u00a0As Europe\u2019s housing crisis grows, so do homelessness rates across the bloc.\u00a0What are the solutions to Europe\u2019s housing crisis?<\/p>\n
By:Joanna YORK<\/a><\/p>\n The month\u00a0of September is always a busy time for the rental market\u00a0in\u00a0Paris<\/a>.\u00a0As students return to the city after the summer break, demand for lower-priced accommodation soars.<\/p>\n But in 2023, renters looking for a cheap room or studio faced a\u00a0tougher challenge<\/a>\u00a0than ever. The French capital is now the\u00a0second-most-expensive\u00a0city in the EU \u2013 behind Dublin \u2013 for renters\u00a0(at \u20ac28.50 per square metre\u00a0per month),\u00a0according to an annual\u00a0Deloitte study<\/a>\u00a0published in August.<\/p>\n In cities across Europe, rising rents coupled with soaring costs for energy\u00a0and food\u00a0are forcing people to adapt to living conditions, particularly the young.<\/p>\n Across the 27 EU member states, more than a quarter of Europeans\u00a0between 15 and 29 years old\u00a0reported living in\u00a0overcrowded conditions<\/a>\u00a0in 2022. In Ireland,\u00a030% of\u00a018- to 24-year-olds\u00a0were still\u00a0living with their parents<\/a>\u00a0in 2022 \u2013 an almost 10% increase in five years.<\/p>\n But it is not just Europe\u2019s young renters who are feeling the squeeze.\u00a0As rents in Paris, Berlin and Lisbon have reached unprecedented highs, interest rates on mortgages have also risen across the bloc,\u00a0driving up costs for homeowners with variable rate mortgages and pricing out many potential buyers altogether.<\/p>\n In the Paris region, property sales\u00a0fell 23%<\/a>\u00a0in the second trimester of 2023.\u00a0Left unable to buy due to high interest rates, large numbers of aspiring homeowners are now\u00a0putting extra pressure on the strained\u00a0rental market.<\/p>\n The crisis has been decades in the making, said Ruth Owen, deputy director at FEANTSA, a European federation of national organisations working with the homeless based in Brussels.<\/p>\n \u201cThere is a fundamental structural issue which is that housing costs have been rising faster than incomes for decades in the European Union, and that trend has accelerated in many places,\u201d Owen said. \u201cIt means that households are very vulnerable when there are any kind of external shocks.\u201d<\/p>\n In the decade up to 2022,\u00a0average rents increased by 19% in the EU and house prices by 47%,\u00a0according to Housing Europe, an umbrella organisation that works with groups providing public, cooperative and social housing in EU countries.<\/p>\n There is little hope for quick improvement.\u00a0The European Central Bank (ECB) raised its key interest rate to a\u00a0record-high 4%<\/a>\u00a0in mid-September and\u00a0interest rates will stay\u00a0high for \u201cas long as necessary\u201d to\u00a0beat back inflation<\/a>,\u00a0ECB chief\u00a0Christine LaGarde<\/a>\u00a0said at the\u00a0end of that month.<\/p>\n Housing supply is also at risk.\u00a0As demand\u00a0for homes\u00a0has fallen,\u00a0home construction across the eurozone\u00a0has slowed to its\u00a0lowest rate<\/a>\u00a0since April 2020, exacerbated by high building costs and\u00a0supply-chain issues first caused\u00a0by\u00a0the Covid-19 pandemic and exacerbated by Russia\u2019s full-scale invasion of Ukraine in 2022.<\/p>\n The issue is particularly acute in Germany, where there is expected to be a\u00a032% drop<\/a>\u00a0in new housing construction between 2023 and 2025, according to a 2023 report from\u00a0the IFO Institute research body in Munich.<\/p>\n Some 1.58 million new homes are expected to be completed in 2025 across 19 European countries included in the study \u2013 14% less than in 2022.<\/p>\n There are also\u00a0persistent issues with existing housing.<\/p>\n \u201cIn Europe, we have an ageing and inefficient building stock,\u201d said Angela Baldellou, director of\u00a0Spain-based housing NGO\u00a0Observatorio CSCAE.\u00a0\u201cWe need to adapt the stock in terms of energy efficiency, but also we need to adapt stock for people because Europe\u2019s population is getting older every year.\u201d<\/p>\n At the same time, building homes uniquely adapted to an ageing population facing increased climate and energy challenges will do little to address current issues if they are not affordable.<\/p>\n A workable solution requires \u201cstriking a good balance between sustainability goals and need for more housing, affordability and liveable\u00a0places\u201d,\u00a0said Diana Yordanova, communications director of Housing Europe.<\/p>\n At its worst, a shortage of\u00a0good-quality, affordable housing is likely to push prices up further, and to worsen access for those who are least able to afford shelter.<\/p>\n However, confidence in the market is low.\u00a0Real estate was the\u00a0most distressed sector<\/a>\u00a0in Europe in 2023, suffering from the highest levels of financial uncertainty, volatility and\u00a0an\u00a0increase in perceived risk, according to a study from\u00a0Weil, Gotshal & Manges, a global legal advisory firm.<\/p>\n Avoiding crises-induced peaks and troughs\u00a0that rock the market may require a\u00a0change in approach in some countries and cities, Yordanova said. \u201cIn many countries, housing has been considered as an asset and it’s very often being used for speculation or for investment.<\/p>\n \u00abIf we look at some of the most successful housing systems across Europe, there is continuous investment in public housing, so that once we’re into a crisis the most vulnerable people do not fall through the cracks.\u201d<\/p>\n The numbers indicate\u00a0that this is not\u00a0happening throughout the continent.\u00a0\u201cNearly 900,000 people sleep rough or stay in homeless accommodation every night in the EU,\u201d said Owen.\u00a0According to figures from\u00a0FEANTSA, the number\u00a0of homeless people in the EU\u00a0has\u00a0risen by 30% since 2019.<\/p>\n However, there are some European success stories. In the\u00a0Austrian<\/a>\u00a0capital Vienna, the city invests around \u20ac500 million in housing construction and rehabilitation as well as financial support for low-income households.\u00a0Close to 60% of the population live in\u00a0municipal housing<\/a>\u00a0or housing subsidised by the\u00a0state.<\/p>\n Finland<\/a>\u00a0offers\u00a0another\u00a0example\u00a0of how\u00a0long-term government policy can successfully\u00a0reduce homelessness<\/a>. The Finnish approach\u00a0works on a\u00a0\u201chousing first\u201d\u00a0principle that recognises housing as a basic human right that, once provided,\u00a0serves as the foundation for resolving other problems.<\/p>\n Owen believes similar initiatives are possible across the EU.\u00a0\u201cThe first step in tackling the situation in\u00a0the European Union is a political commitment,\u201d she said.<\/p>\nLack of supply<\/h2>\n
Political commitment<\/h2>\n