Download Housing systems in Western Europe: Theory and Practice

Housing systems in Western
Europe: Theory and practice
Moscow
Peter Boelhouwer
OTB Research Institute for the Built
Environment
Housing systems in Western Europe: theory and practice
1 7-4-2010
Content
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Reasons for government intervention
Housing: wobbly pillar between state and market
Housing and the welfare state
Developments in the owner-occupied and rented sector
Emerging trends on the housing market before the
economic crisis
• Housing markets and the economic crisis
• Housing market crisis: what to do?
• Conclusions
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Reasons for government intervention
• The right of decent housing is a fundamental right
(constitutional law and universal declaration of the rights
of human beings)
• Government is responsible for sufficient affordable,
qualitative descent housing on the right place
• Minimum quality level
• Content: place, production, affordability, distribution,
quality
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Housing as the wobbly pillar of the
welfare state: Harloe/Thorgersen
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Absence of standard
Definition of housing need
Changes in achievements
Broad government goals/ connection with other policy
areas
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Main Characteristics of the welfare
state
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De-commodification
Influence of central government
Degree of political corporatism
Fragmentation in the provision welfare services
Treatment of the traditional family in welfare politics
Role of the state, market and family in the provision of
welfare services
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Development welfare states (2)
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Criticism on welfare states
Budgetary problems
More emphasis on the market and freedom of choice
Enabling state
Empowerment, privatization, responsibility
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The three criteria of EspingAndersen applied to housing
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Differences between the housing systems of the
three welfare state regimes (1)
Criterion
Decommodification
Stratification
Socialdemocratic
 large
Corporatist
Liberal
 quite large
 low
 relatively low
 high, mainly based on
social status
 important position for the
family
 considerable influence for
private non-profit
organizations
 functional
decentralisation,
incremental, problemsolving policies
 preservation of the social
stratification in society
 preferential treatment of
the traditional family
 stimulation of households
and other private actors
to take initiatives on the
housing market
 high, mainly
based on income
 dominant
position of
market parties
Mix of State,
market and family
 dominant
position of the
State
State regulation
 strong central
government
influence
General housing
policy objectives
 guaranteed
universal high
level of housing
quality
 relatively little
State regulation
(at both central
and local levels)
 dominant
position for the
market
 State only
supports
marginal groups
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Differences between the housing systems of the
three welfare state regimes (2)
Criterion
Social-democratic
Corporatist
Liberal
Subsidization
 large–scale
production
subsidies
 subject subsidies
for large target
groups
 strong State
influence on price
setting and price
regulation
 segmented
subsidies; specific
arrangements for
specific groups
 means-tested subject
subsidies
 few production
subsidies
 moderate State
influence
 State regulation of
prices to correct
negative effects of
the market
 State intervention to
correct the market
 certain groups may
be favoured in the
allocation process
 market determination
of house prices
Price setting and
price regulation
Housing
allocation
 allocation on the
basis of need
 market determination
of housing allocation
in a large part of the
housing stock
 regulated allocation in
a small part of the
housing stock.
(reserved for lowincome groups)
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A proposed new conceptual model for the
welfare state
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Main characteristics of the four welfare state
regimes according to the modified theoretical
framework
Decommodification
Influence of
central
government
Degree of political
corporatism
Labour-led
corporatist
Conservativecorporatist
 high
 relatively high  relatively high  low
 high and
direct
 quite high and  quite high and  low
often indirect
often indirect
 many
 many
corporatist
corporatist
structures and
structures and
processes
processes
Fragmentation in
 fragmentation  fragmentation
the provision of
on the basis
on the basis
welfare services
of measurable
of occupation
criteria
and/or social
status
Treatment of the
 no preferential  preferential
traditional family
treatment for
treatment for
in welfare policies
the traditional
the traditional
family
family
Role of State,
 dominant
 important (if
market, and family
position of the
not dominant)
in the provision of
State
position of the
welfare services
family
Modern
corporatist
Liberal
 many
 few
corporatist
corporatist
structures and
structures and
processes
processes
 fragmentation  fragmentation
on the basis
on the basis
of measurable
of measurable
criteria
criteria.
 no preferential  no preferential
treatment for
treatment for
the traditional
the traditional
family
family
 welfare
 dominant
services are
position of the
provided by
market
both market
and State
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Policy for social renting (1)
England
Principal purpose of Safety net for lowsocial renting
income households
Allocation system
Rent regulation for
new contracts
According to need
According to policy
prescription
Rent regulation for
rent adjustment
Policy to link rents to
quality and local incomes
in the longer term
By Office of Tenants and
Social Landlords
Regulation and
supervision of
landlords
Bricks-and-mortar
subsidies
Tax concessions
Available
Available; depends on
legal status landlord
Housing allowances Available
Socio-economic
Lower incomes
profiles of tenants
compared to market
renting
Flanders
To build and provide
social rental dwellings
and to revalue the
housing stock (right to
decent housing)
According to need
Rents based on tenants’
income and market rent
(Flemish policy formula)
Adjustments in line with
household income
France
To provide affordable
housing to households
on low incomes
According to need
Rent setting depends on
contract between
government and social
landlord
Influenced by the
government
Flemish government:
supervision and
registration. Sector
organisation, VMSW:
finance and guidance
Available
Supervised by central
government
organisation: MIILOS,
financial supervision by
Available
Available
Implicit via incomerelated rents
Lower incomes and
weaker social profile
Available
Caisse des Dépôts
Available
Relative concentration
of low-income
households
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Policy for social renting (2)
Germany
Principal purpose of To rent the households
social renting
up to certain income
limits
Ireland
House those unable to
afford market sector
housing
Allocation system
Rent regulation for
new contracts
According to need
Income-related rents;
each council has its own
scheme
Rent regulation for
rent adjustment
According to need
Contract between
subsidy provider
(municipality) and
landlord
Contract between
subsidy provider and
landlord
Adjustments in line with
household income
Netherlands
To house people who
are unable to find an
appropriate dwelling for
themselves
According to need
Regulated sector: based
on quality points.
Unregulated sector:
market rents
Regulated sector:
annual maximum rent
increase set by
government
Social Housing
Management Decree for
housing associations.
External supervision by
Minister
Available
Regulation and
supervision of
landlords
Depends on organisation By central government
type
Bricks-and-mortar
subsidies
Tax concessions
Available
Available
Available
Available; variations
between local authority
and housing associations
Not available as of 2008
Housing allowances Available
Not available
Available
Socio-economic
Probably relatively more
profiles of tenants
lower incomes presently
compared to market than in the past
renting
Low incomes
Relatively strong in
lower and middleincome deciles
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Policy for market renting (1)
England
Free market
Flanders
Free market
Rent regulation for
new contracts
Free market
Mainly free market
Rent regulation for
rent adjustment
Based on market
conditions
Regulation and
supervision of
landlords
Bricks-and-mortar
subsidies
Tax concessions
Selective; by local
authorities
Based on index of costs,
a corrected consumer
price index
Depends on organisation
type
Not available
Not available
Allocation system
Tax treatment similar to
other investors
Housing allowances Available
Socio-economic
profiles of tenants
compared to social
renting
Higher incomes
Not available
Explicit subsidy for
movers to higher quality
or more suitable
dwellings
Higher incomes and
stronger social profile
France
Free market (except for
the intermediate sector)
Free; based on old rent
or on reference
dwellings in case of
renewal of a contract for
a sitting tenant
Based on index of costs
Depends on
organisation type
Available for
intermediate sector
Available
Available
On average higher
incomes than in social
renting but also greater
spread
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Policy for market renting (2)
Allocation system
Rent regulation for
new contracts
Rent regulation for
rent adjustment
Regulation and
supervision of
landlords
Bricks-and-mortar
subsidies
Tax concessions
Germany
Free market, waiting list
for each landlord
Ireland
Free market
Netherlands
Allocation of cheap
stock regulated in case
of housing shortages
Free market, unless
Free market
Regulated sector: based
usury rents
on quality points
Based on reference rents Annual reviews; based on Regulated sector:
market conditions
annual maximum
increase set by
government
Depends on organisation By local authorities; and Depends on
type
through statutory
organisation type
registration with PRTB*
Not available
Not available
Not available
Available
Selective fiscal incentives Exemption from
corporate tax for
institutional investors
Tax concessions for rental Available
payments
Mean incomes nearly
Relatively strong in the
twice social sector levels lowest and highest
income deciles
Housing allowances Available
Socio-economic
profiles of tenants
compared to social
renting
No recent information
found
* PRTB = Private Residential Tenancies
Board
Housing
systems in Western Europe: theory and practice
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Key housing policy statements (Norris
and Shiels) (1)
• Netherlands: accelerate restructuring neighbourhoods and
housing production, sustainable living climate, promotion of
home-ownership, ensure affordability
• Belgium: promoting home ownership and provision of
sufficient social housing
• Germany: promote home ownership and devise the range of
housing policies necessary to address the increased regional
differentiation of housing markets
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Key housing policy statements (Norris
and Shiels) (2)
• France: to house every person according to her/his wishes,
action must be taken on each link in the housing chain. This
includes: facilitating home ownership and stimulating private
rental and social housing output
• England: increase the provision of high quality and affordable
housing in areas of high demand and tackle the housing
shortage in London and the South East
• Sweden: housing policy aims at the supply of high-standard,
affordable housing
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Key housing policy statements (Norris
and Shiels) (3)
• Denmark: good and healthy housing for all.
• Austria: housing as a basic human need should not be subject
to free market mechanism
• Spain: increasing the proportion on rented dwellings in the
Spanish housing stock
• Slovakia: differentiated state support for construction intended
for the various income groups within the population
• Slovenia: construction of 10.000 new dwellings annually, to
meet all housing needs
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Cross-cutting housing challenges
(Lawson & Milligan)
• Rising housing costs and declining housing affordabilty
• Housing supply shortages and issues of housing quality
• Social exclusion and segregation related to housing location,
tenure and quality and race and ethnicity
• Special housing needs of excluded groups, indigenous
communities and those with support needs.
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National policy responses (Lawson
and Milligan)
• Facilitating home ownership for new entrants and lowerincome households
• Promoting private investment in affordable housing
• Using the existing private rental market
• Reinventing social housing
• Promoting housing and neighbourhood sustainability
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Developments in governance and delivery
in housing systems (Lawson and Milligan)
• The complexity, volatility and greater differentiation of
housing markets within regions and countries
• Neo-liberal agenda’s such as public sector reform and
privatisation
• Growing acknowledgement that conditions of privatisation
need to change, as simple formulations of less government
and more market are not working
• The influence of international agencies (EU directives on
competition issues and overcoming regional disadvantages)
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Most successful international responses to
emerging housing issues (Lawson and
Milligan) (1)
• Housing as an integral part of social, economic and
environmental policy
• Sufficient housing expertise (good institutions)
• A long-term commitment to achieving desired housing
outcomes
• A well designed mix of market and non-market mechanisms
• A climate where diversity, flexibility and local innovation can
flourish
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Most successful international responses to
emerging housing issues (Lawson and
Milligan) (2)
• Comprehensive and up-to-date market analysis and policyorientated evaluation strategies
• The adoption of balanced multi-tenure policies with a
common focus on increasing affordability and sustainable
housing options, improving tenure choice and pathways and
supporting socially mixes communities.
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Emerging trends (1): General improvement
in housing conditions (Whitehead)
• No numerical shortage
• Average standards of housing rising in most European
countries (except transition economies?)
• Lower inflation and nominal interest rates
• Average financial housing costs stable or falling in most
countries
• But growing problems of access and affordability
• Increasing regional and urban differentiation
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Emerging trends (2): House prices
(Whitehead)
• House prices have been rising sharply in real terms across
Europe over most of the last decade (starting to slow down)
• Rises out of line with incomes
- impact of structural changes in inflation and interest rates
- speculative bubbles or underlying economic
growth/constraints?
- housing as a asset class
• Major exceptions, Germany, Austria en Switzerland
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Emerging trends (3): Role of private
sector finance (Whitehead)
• Particularly in northern Europe where housing finance
instruments highly developed
• Development of mortgages backed securities/ bond issues
(Denmark in forefront)
• Use of private funding to support social sector housing
• Use of housing to support other borrowing, growth of remortgaging, interest only loans etc.
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Conclusions: perspectives
(Whitehead)
• Average households already in owner-occupation are benefiting
from greater choice, flexibility and stability
• Marginal purchasers and new entrants face major access and
affordability problems
• Impact of inheritance and issues of intergenerational equity
• Concerns about systemic risks in the housing system
- US current experiences
- Impact of broader economic downturn
• Longer term issues relating to the use of housing assets
• Inflexibility of owner-occupation as dominant housing tenure
for labour market, urban regenerating as well as the housing
market itself
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Economic and housing market
indicators by country
Bel Ger
General economic indicators
Growth GDP 2009
-2.9 -5.0
Growth GDP 2010
0.6
1.2
Unemployment
average 2007 – 2009
Unemployment latest
(jan 2010)
IRL
ES
F
NL
AT
SW
UK
-7.5
-1.4
-3.6
-0.8
-2.2
1.2
-4.5
0.3
-3.7
1.1
-4.9
1.4
-5.0
0.9
7.5
7.7
7.5
12.5
8.5
3.2
4.4
6.9
5.5
8.0
7.5
13.8
18.8
10.1
4.2
5.3
9.1
7.8
-7%
-6%
-7%
1%
6%
-18%
Down
up
up
-33%
nav
-10%
Housing market indicators
House price change
0% -12% -23%
Mid 2007 – mid 2009*
Latest house price
up stable Down
(rapidly)
trend
Transactions 20072008
-
Building permits 20072008
-
4
%
-2%
-36%
(rapidly)
stable stable
nav
-11%
up
-46%
-6%
-20%
-60% -17% -1%
nav -16% Construc3
ting new
%
series
*Mid 2007 the house prices in most countries
reached their highest levels; mid 2009 is the year where most nations have data
available.
Note: Germany and Belgium = single family dwellings
Source: GDP and Unemployment = Eurostat; House price change = national statistical
bureaus and Hypostat 2008; Transactions 2007-2008 = Hypostat 2008; Transactions
latest is national sources.
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Measures taken
• Protection of home owners: avoiding payment problems
and eviction
• Stimulating demand for a new existing owner occupied
homes by households
• Stimulating social/public housing associations to take on
unsold completed new dwellings initially targeted for
owner occupation
• Stimulating production of social/public rental dwellings as
an anti-cyclical measure for the construction sector
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Crisis measures what to do and what
not to do?
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Number of countries have taken only limited action
Extra protection for home owners to avoid repossessions
Attempts to get rid of the overhang/unsold dwellings
Stimulating demand for newly constructed dwellings
Building of new social housing
Buying unsold new dwellings by social landlords
Unlimited speculative building and a laissez faire attitude
on planning
• Differences in the structure of the housing market are
quite important to explain the crisis and measures
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Sensitivity of housing markets to the
economic climate
• Dynamic markets or more sensitive than static markets
• Effects of crisis are strongest in England and Ireland:
limited stabilizing factors through government policy or via
financial industry, buildings are built speculatively and in
Ireland few planning restrictions
• Dutch market for new houses has been hit hard
• Germany prices of existing dwellings show a strong decline
• Belgium least trouble form the economic crisis
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Conclusions
• Countries that are severely affected by the crisis are also
confronted with the largest problems on the housing
market
• Difficult to establish the effects of the economic crisis and
the effect of the structure of the housing market and
stabilizing factors
• Possible relation to the general economic structure and the
housing market structure: a nation that is highly sensitive
to the general economic climate also has a housing market
structure that is sensitive to the economic climate
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End
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