Research Project: Housing Policies in the European Union

Results

The development of the questionnaire was at the core of the first step of the research project. A key requirement for the questionnaire was the integration of all leading research questions to allow for an in-depth analysis. The different national evolutionary paths and manifestations of housing policies had to be considered during the design of a questionnaire that facilitates comparative studies of the housing policies in the European Union.

The developed questionnaire contains three major sets of questions:

• Actors and guiding principles of housing policies: In the first part, horizontal and vertical competences between the different departments and political levels responsible for housing policies were surveyed. Additionally, this part contained questions regarding the leading principles of the national housing policy.
• The national system of housing provision: Different sub-segments and housing tenures on the national housing markets (owner occupied housing, rental market, hybrid/mixed tenures, informal housing) and their regulatory framework were at the core of this segment.
• Housing provision problems and policies: A problem-centred characterization of the actual state of housing provision as well as short descriptions of relevant policy instruments were in the focus of the third part. A separate instrument-related questionnaire aimed at providing the objectives and steering approach of each instrument.

The survey started after a trial questionnaire in December 2018. Recognised country experts from the scientific community of each Member State committed to complete the questionnaire. Up to April 2019, completed questionnaires were available for 25 EU Member States providing a basis for starting the structured comparison. The missing questionnaires were added in the further course of the project. In addition, feedback from the Housing Focal Points could be obtained for single countries.

An international expert workshop took place on 24–25 June 2019 at the Federal Press Office in Berlin. First, cross-sectional reports based on the survey and other secondary statistical data were presented and discussed. 22 academic country experts representing 20 Member States as well as representatives of the BMI and BBSR participated in the workshop. Key insights from the workshop focused on the validation and comparability of country results in the context of structural comparative evaluations. To verify individual answers and classifications, feedback loops were conducted with the academic country experts.

At the end of the project, the country reports for all EU Member States and the United Kingdom were compiled based on the survey results. They were then reviewed by the academic country experts and the national Housing Focal Points.

While the original objective was to divide housing policies in the EU into overarching, distinct metagroups and to identify group representatives for the in-depth survey on this basis, the cross-evaluation of the different thematic blocks revealed only a low degree of congruence between structural determinants of housing systems and housing policies in the EU Member States. Instead of researching type representatives, the in-depth survey was therefore conducted in case studies. Each case study was selected from problem-oriented country groups, which were formed separately for each of the three thematic blocks. The in-depth survey was conducted in the form of guideline-based online interviews with the academic country experts in January 2020. The results were developed on the basis of the interview protocols prepared for this purpose and validated with the experts.

In terms of content, the situation regarding governance structures in housing policy is very diverse. This applies both to the horizontal distribution of competencies between different national units (ministries, agencies, specialised authorities, etc.) and the vertical distribution of competencies across the individual administrative levels. No striking connections have been found between the type of distribution of competencies and the type of housing policy practised. The willingness to reform also varies greatly.

The distinction between different housing provision systems can be seen as particularly formative, according to which four main groups can be distinguished, taking into account structures of the housing stock, forms of use and social provision functions:

• Markedly diversified systems with a relatively balanced quantitative ratio between rental tenures and owner-occupation, with an average ownership share of between approx. 50% and 65%. The rental housing sector in the countries of this group is mainly characterised by the existence of institutional providers in the market-oriented rental housing sector. However, the composition of subsidised, non-profit/cooperative and market-based rental housing sectors is very heterogeneous. These differences also characterise the relationships between tenures of in terms of accessibility to owner-occupied housing and target group diversification within the rental housing sub-markets.
• Less diversified, mainly two-tier systems with a share of home ownership between approx. 65% and 75% and a rental housing market based mainly on small private letting. In terms of accessibility and competition between tenures, a more hierarchical relationship between rented housing, which is mainly seen as a transitional form of housing, and owner-occupied housing can be noted in the member states of this group compared to the first group. Subsidised housing, if available, is of secondary importance in quantitative terms.
• Systems with predominant importance of owner-occupied housing with a market share of at least about 75% and a reciprocal share of mainly private rental housing. The quantitative imbalance corresponds to an even stronger hierarchy between owner-occupation and rent in terms of stability and quality compared to groups 1 and 2, resulting also in a distinct marginalisation of subsidised or other social rental housing, if available.
• Owner-occupation-dominated countries, characterised by privatisation experiences in the course of the post-communist transformation. A formally marginal supply of rental housing (both private and social) is typical of this group, although this is supplemented by various forms of informal letting activity.

With regard to national housing policies, the results show that the main types of housing policy instruments distinguished in the research project, housing allowances, subsidies for homeowners and homebuyers, subsidised housing and rent regulation are used in most EU Member States. However, subject-oriented instruments (housing allowances and subsidies for homeowners and homebuyers) and object-oriented instruments (subsidised housing) are more common among all EU Member States, while rent regulation is mainly used in western EU Member States. Against this background, there are signs of convergence among the EU Member States, at least with regard to subject- and object-oriented instruments. Furthermore, it is striking that among subject-oriented instruments, there are significantly more subsidies for homeowners and homebuyers, indicating a certain emphasis in favour of promoting property ownership. In addition, to some extent it was possible to gather information on the scope – measured by the number of households/dwellings supported – and the intensity of the instruments – measured by public expenditure. However, it must be noted that in many countries, corresponding information is not at all or only partially available (e.g. only for certain instruments or only specific indicators). However, the available information shows that the scope and intensity of the subsidy instruments used varies considerably across the EU Member States, as does the importance of housing allowances.

Despite heterogeneous housing markets and housing policy instruments, there are also some similarities with regard to the main factors influencing housing policy decisions over the last ten years. For example, energy efficiency issues have to some extent shaped housing policy in almost all Member States. The continuing trend towards urbanisation also plays a prominent role. Other common drivers are immigration and demographic changes and the resulting need for housing for the elderly and smaller units. By far the most widespread problems of housing supply across all Member States are price and rent increases in urban areas, the associated financing problems and a lack of social or subsidised housing. Furthermore, in some Member States with a strong tradition of owner-occupied housing, there is also a lack of regulation of the rental housing market. Another increasingly widespread problem seems to be energy poverty. Finally, some Member States highlight a lack of provision of shelters for the homeless.
With regard to the effects of the financial crisis, three impact mechanisms can be identified on the basis of the case studies of Denmark, Greece, Hungary and Sweden:

• First, the impact of private real estate financing, where a tightening of lending rules made access to homeownership more difficult;
• second, the impact of the immigration-related increase in demand for housing, together with the low interest rate policy in the aftermath of the financial and euro crisis, which affected house prices - positively and negatively - in the target countries;
• third, capacity bottlenecks as a result of more restrictive corporate financing for the medium-sized construction industry, which made recovery more difficult for the construction sector in the Member States concerned.

It should be emphasised that the above factors did not play a role in all Member States. On the one hand, there are countries in which the interdependencies between the housing market, the credit sector and the general economic development contributed to a clearly pronounced recession. Typical characteristics of these countries are demand-side problems in the housing market, especially in the area of new construction demand by private households, negative house price dynamics and household liquidity problems, which have contributed to destabilising the financial sector. On the other hand, there are countries that hardly felt any recessionary effects. In these countries, shortage problems in the housing market were the main problem. In particular, the interplay of immigration, expansionary monetary policy and supply shortages had a significant impact on the affordability of owner-occupied housing in some Member States in the decade following the financial crisis. It has also become apparent that the vulnerability of individual countries is not a systematic matter of national financing cultures. First-time buyers in countries with traditionally equity-based financing cultures or those with high homeownership rates were also affected by these affordability problems, as rental housing markets did not provide sufficient housing alternatives for starter households.

When analysing the competitive conditions between owner-occupied and rental housing, the case studies of Bulgaria, Croatia, Ireland, and Italy show that the main drivers are trends in housing demand. First, migration and ageing are likely to be long-term structural trends. Diverging trends in population development between peripheral and central regions can be identified both within and between the Member States. Declining fertility rates and an increase in the elderly population are an issue in all Member States, albeit to different degrees and with regional differences. From these demand-side trends, some basic common patterns emerge in terms of land use patterns: Member States with ongoing urbanisation trends, high labour market mobility, and positive net immigration face increasing demand for rental housing, which is likely to contribute to a further increase in the importance of the rental sector at the expense of owner-occupied housing. Particularly strong changes, relatively speaking, can be seen in some Member States in which renting for housing supply was originally of rather low importance. In this sense, a certain degree of convergence of tenures in the EU can be observed, although this trend cannot be generalised across the EU.

As regards the third in-depth theme, the case studies of Estonia, France, the Netherlands and Poland show that the EU's influence on housing policy is generally considered to be rather low, although there are notable exceptions. The EU can provide incentives in various areas, depending on the existing housing stock, the general national orientation of housing policy and ongoing national reforms. While EU regulations regarding state aid plays an important role in at least one case study country (the Netherlands), it does not appear to have much effect in other countries. The same is true for EU regulations on energy efficiency, which are more consequential in countries with a large proportion of unrenovated housing stock than in countries that already have ambitious energy policies. Anti-discrimination legislation is generally considered to have a low impact, but may be important in the context of barrier-free construction and renovation. EU financing and investment programmes play a minor role regarding the overall volume of national housing finance, but EU programmes can have an important leverage effect on the financing of individual projects. As there are considerable differences in the overall impact of the EU on national housing policy in the four case study countries, it can be assumed that this also applies to the EU Member States in general. Thus, the relevance of EU regulations is highly dependent on the existing national housing stock and national housing policy.

The results of the study were presented at a European conference on housing policy on 6 November 2020 under the German Council Presidency.