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Episode 14 – Housing

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In this episode Mary McCaughey speaks with Eurofound Senior Research Manager Hans Dubois on the issues that feed into housing insecurity in Europe, and the actions that need to be taken to address them. Together, they analyse findings from Eurofound’s recent Unaffordable and inadequate housing in Europe report, which presents data from Eurofound’s Living, working and COVID-19 e-survey, European Union Statistics on Income and Living Conditions and input from the Network of Eurofound Correspondents on various indicators of housing security and living conditions.


00:00:33 Mary McCaughey
Hello, and welcome to this edition of Eurofound talks housing. The spiralling housing costs and the lack of availability of affordable housing is causing anxiety and upset across the EU. People are worried that they're going to lose their accommodation. Younger people are also obliged to stay longer at home, where that is possible. So, today we want to talk about the housing situation in Europe. Eurofound has just produced a report on affordable and accessible, inadequate housing. We are looking at the different situations across the European Union and access points, different age groups, how different people are impacted. The research manager who has been driving this work is Hans Dubois. He's a senior research manager here at Eurofound and today I'd like to welcome you, Hans.

00:01:23 Hans Dubois
Thank you.

00:01:24 Mary McCaughey

So, Hans, it's something which is really affecting so many people, so many young people, so many older people. Keeping that in mind that we are talking about people and not necessarily people rather than the problem, can you just give us an idea of what are some of the main challenges that we would face when we look at the housing situation across Europe today?
00:01:46 Hans Dubois
Well, on the one hand there's differences between the countries in terms of housing problems, but there are also great similarities. Regardless of whether you live in Ireland, Sweden, Spain, Greece, there are big groups facing problems in affording adequate housing, and often these differences are based on where you live in the country rather than in which country you live. For instance, if you live in a capital city, you are more likely to face problems. If you have a low income, you're more likely to face problems. In some ways, there's more similarities between low-income groups living in these countries and high-income groups living in these countries than between the countries as such. So, somebody with a low income in a capital city has a large problem anywhere in Europe.

00:02:38 Mary McCaughey
OK, so we're not really seeing a huge difference in terms of Member States who are succeeding in this area of housing as against those who have a perennial problem in this area.
00:02:49 Hans Dubois
No. Well, there are, of course, Member States faring better in certain dimensions and Member States faring worse on average, but in general there are large groups facing different types of housing problems in all the Member States. But there are big differences in the general landscape in these different Member States. So, for instance, whether many of the problems relate to whether you own a home or you rent a home. And for instance, ownership is much less common in some countries than in others. For instance, the countries with the highest ownership rates are actually post-communist or Southern European countries, and these are owners without mortgages. That sounds like good news. They don't have rent payments. They don't have mortgage payments. But many of them actually live in poverty, have low incomes and face utility bills, which you also count among housing costs.
00:03:50 Mary McCaughey
OK, so they own their house, but they can't pay the bills.
00:03:53 Hans Dubois
Exactly. And then you have, on the other side, countries where it's really common to rent your accommodation, like Germany, Austria, and you have countries where people own their home and pay a mortgage – Sweden, Netherlands are where it's most common in Europe to have a large mortgage. The problems differ a bit between countries, but there are groups in all types of tenure in each of the countries which face large housing problems.
00:04:19 Mary McCaughey
So, looking at it from a distance, would you say that we're talking about issues which are primarily access to housing, to adequate housing? Is it about the affordability of that housing? Is it about the quality of the housing? Or is it a mix of all in different Member States?
00:04:40 Hans Dubois
In the report, we distinguish between four types of problems. The first one is indeed access to housing at all, so housing exclusion, which captures the homeless but also young people who cannot afford to leave the parental home.

But we also look at groups who do have access to housing but face housing insecurity, so many people find it rather likely, or at least not very unlikely, that they would need to leave their home within the next three months. And that's by far largest among private renters, renters on the private market, so that's housing insecurity.

Then we also look at the third group of problems, which is, yes, people are kind of secure in their home, they have a home in the first place, but they face housing costs which mean that they cannot make ends meet, so they face problems in covering other needs because of high housing costs. 
And in the fourth group, which you were referring to quality, housing adequacy more generally, that is a fourth group of problems which relate to affordability, of course, all of these four problems.
00:05:49 Mary McCaughey
And if we were to talk data and percentages, you spoke about the post-communist countries being the biggest home owners in the European Union and other former Member States or earlier Member States who are perhaps stronger in the rental market. Can you give us some statistics which give us an idea of what we're talking about there? If we were to look at some of those post-communist countries and home ownership, what percentage are we talking vis-à-vis rental and vice versa?
00:06:21 Hans Dubois
In the EU overall, it's by far more common to own your home than to rent your home. Germany has the highest rate of renters, but that's half. So, half of the population rents and the other half owns their home. On the other side of the spectrum are countries like Romania, where almost everybody owns their home, basically, without a mortgage. And then there's some countries where ownership is rather common, like in the Netherlands or Denmark, but usually the bank owns the house because the mortgages are rather high. So, it's on this spectrum, but, in general, in the EU, home ownership is the most common. However, it has decreased over the past years.
00:07:04 Mary McCaughey
And how much has it decreased by?
00:07:06 Hans Dubois
If you look at the average, it doesn't sound so much, it's 1 percentage point, but over a decade such a change in such a statistic, it is rather large and it's particularly large among younger people.
00:07:20 Mary McCaughey
When we talk about the younger Europeans that are staying at home or being forced to stay at home, can you give me an idea of the kind of consequences we see that having not only for them but for society at large?
00:07:33 Hans Dubois
That would likely postpone decisions such as forming a family, with possible impacts on demography, fertility. Naturally, it contributes negatively to quality of life, because it doesn't match the preferences of many of these people. I have to be clear here, we don't compare absolute proportions between countries, because there are big cultural differences in how long it feels good to stay with your parents, let's say. But we do look at changes in time, and there you see huge increases in Spain, in Italy. We do also have some national information on the reasons for that, and that's really unaffordability of housing options. So, that's also a consequence in terms of social cohesion, it may create inequalities between generations. You see the ownership gap also, for instance, between young people and old people increasing in Europe. In the longer term, the fact that younger people are less likely to buy a home may have consequences for their retirement as well, because at the moment many people pay off their mortgages, own a home without a mortgage when they are older. But in the future that may not be the case anymore. People need to keep on paying rent – that’s no problem if the income is enough, but otherwise it can be a problem. So, there are longer term worries.
00:09:01 Mary McCaughey
And, Hans, what is being done across the European Union and the different Member States to address this issue?
00:09:08 Hans Dubois
Well, in terms of housing affordability, generally – because we need to emphasise it's not only young people who are facing these problems, there's people in all age groups facing housing and affordability problems – you have lots of rent subsidy schemes, we map them in the report. You have social housing options in some countries. These are really focused on people with the lowest income and they protect them, we see in the report, rather well against problems in terms of adequacy but also in terms of security, utility arrears. You see that, yes, these are common also in social housing, these problems. But, if you look at low income groups in other types of tenure, they have more problems. In some countries, social housing also covers people with slightly higher incomes. In countries like Austria and the Netherlands, there's a large, relatively large, social housing stock. So, that's being done, you have the rent subsidies, social housing.

You also have ownership supports, many of them are mortgage support for younger people. Specifically, if you live in an area which is seen as needing some development, you get more support. All these types of housing support measures come with problems. We see with ownership support, usually it benefits those people who anyway would have been able to buy a home. They may buy a larger home or they would buy it earlier. It drives up prices as well. That's the same with rent subsidies, so there are challenges there in addressing it. Of course, they are important for the people who are receiving them, but they also come with challenges.

In terms of social housing, there are huge waiting lists even in countries where you have a large social housing stock, so there are certainly access problems. Often it's the most difficult for people on the waiting list who are entitled to social housing, they are usually younger than the people who are already in social housing, so there are problems in accessing that as well.
00:11:22 Mary McCaughey
And at a EU level, what kind of initiatives have been introduced to offset the various issues associated with the housing crisis?
00:11:30 Hans Dubois
We have the European Pillar of Social Rights, which has figured some very good initiatives on addressing homelessness as well, and most recently the idea is to prevent evictions and, in case an eviction takes place, to facilitate the transfer to a more affordable home. But there's also a lot of money from the European Green Deal going into housing, improving the quality of housing.
00:12:02 Mary McCaughey
When you when you talk about the quality of housing, what kind of elements are we talking about? What are the key concerns in terms of quality housing?
00:12:11 Hans Dubois
First of all, I think it's important to note that that's another dimension in which countries actually differ a lot, and that's whether people live in apartments or homes. And here you see that in countries like Ireland, but also Croatia, the proportion of people who live in a home is really high, like 9 out of 10 people live in a home, more or less, while, in other countries, Spain and all the Baltic states, there around one third of people live in a house and the rest in apartments.

So, there are big, big differences in Europe and that has consequences for adequacy, because you have different problems if you live in a house than if you live in an apartment, and one of these differences is noise, for instance. Now, if you think about the Green Deal, you immediately think about bad insulation, low energy efficiency. Indeed, when you ask Europeans about the problems they face in their dwelling, the problems we asked for, most indicated that they have a problem in terms of inadequate insulation.

So, we also looked into the detailed workability of the home, so problems or the importance of these aspects of the home changed over the pandemic. You see that, for instance, interestingly, having a balcony or a garden became much more important over the pandemic, as well as a good internet connection, of course. But having a balcony or garden, that's less of a problem often if you live in a house than if you live in an apartment.

It's important not to look too narrowly only at the home. You can live in a quite nice home, but if your neighbourhood is not good, that may be not enough. So, we also see that aspects of the neighbourhoods, importantly access to public transport, for instance, are very problematic, particularly in rural areas.
00:14:09 Mary McCaughey
I suppose a key question is, are we treating the outcome rather than the causes? And if I were to say to you, the primary reasons for these spiralling rents and house prices and this lack of availability and quality of housing, do we know what they are? Have they been researched and should we be spending more time tackling the base of the problem rather than the result?
00:14:39 Hans Dubois
Indeed, the long-term solution would be to increase the housing stock, but it's not enough just to think about building homes. There are a lot of empty dwellings across many countries, so it would be tempting to say that these need to be discouraged. But, actually, in many countries the quality of these empty houses is not so good so that would need to be improved simultaneously. At the same time, it's not just about building housing, about renovating housing. If you have empty housing or you build housing in an area where you cannot get to employment, cannot get to healthcare, cannot get to shops, it's not so useful, it wouldn't solve the situation, because then again people would look for homes in other areas with high prices as a consequence. So, it's important also to connect these houses well to services.
00:15:36 Mary McCaughey
But, Hans, is that not something that we should be seeing as a no-brainer, in the sense that we have a twin transition of digitalisation and climate change? We know that that's going to impact on the way we live and work. We know already that people can remote work from places which are extremely remote. We know also that we can access public services in a different, more digitalised way. We know that people are moving from the capitals often to more regional areas for quality of life and affordability reasons, but also maybe family and others. So, we know these are processes which are in train. We also know that they're probably going to accelerate rather than slow down. So, should we be spending more time looking at options to try and optimise what is available in these transitions, rather than, as you say, looking at the tried and tested option of moving more and more people into conglomerates where they can supposedly access these services easier?
00:16:40 Hans Dubois
Absolutely. It's a very good point. It's two things. First of all, it's interesting to see that, in general, there's an increase happening in people living in flats, actually, but that's not happening inside cities or in rural areas. That's happening in towns and in suburbs. Now, the idea is always that there's urban sprawling going on, so people moving to suburbs to have a large family home, etc. But, actually, what we see in Europe is not that. It's that people go and live in suburbs and towns in apartments, which probably means that they're unable to afford to live closer to the city centre in many of these cases. You also see that in some places, where we map that a bit in the report, that in some countries you see a clear move of people leaving the main cities. However, still, the vast majority of people live in cities and there's not been a very big change in that. However, there are huge opportunities indeed if digitalisation is taken up in the way that would be good and one may expect, then this could indeed very much facilitate solving some of the problems in terms of housing. The same with the green transition. There's a huge amount of funds available now.
00:18:13 Mary McCaughey
If we channel them into the right places and the right activities and initiatives, we could see some return from that. Another thing which I find it's interconnected and also touches on many of the other podcasts we've had on different topics is are we seeing a level of inequality in the area of housing? I mean, we've already talked about young people being locked out of the market to some degree. To some other degree, older people are finding themselves more vulnerable in certain cases than they were before. Is the squeezed middle even more squeezed than it was before when it comes to housing? Or do you feel that we're seeing different inequalities emerging in this particular crisis of housing?
00:18:57 Hans Dubois
Well, I think the squeezed middle is an important one to highlight. There's a lot of support available, but almost all have income thresholds, which very often are fixed. Not in Poland, not in Germany, not in the Netherlands; there are gradual thresholds to be entitled to rent subsidies, for instance. When there are these fixed thresholds, which is mostly the case, if you earn a bit too much, you're not entitled to anything so these are often people who face large problems, they are not entitled to social housing. There are some solutions. In Italy, for instance, for people who earn a little bit too much to be included in social housing but too little to afford decent housing. But this is certainly a group which faces problems, and a large part of them is renting on the private market, which anyways is a group in a vulnerable situation in many regards.

You mentioned older people. During COVID, all Europeans had a little bit of a snapshot of what life would be when they're older, because usually older people spend much more time at home and in the local area. So, it is not surprising that all dimensions of the home and of the local area have become more important since COVID, as we show in the report. So, in general, improving the quality of the home with this ageing population in mind should be a key priority, I think. And it should be integrated in the way the Green Transition funds are spent, because there will be large amounts of retrofitting. Well, if you do anyways these big renovations, it sometimes takes a little effort to also improve the quality of the house more broadly. That will be a lost opportunity if that's not taken.
00:20:48 Mary McCaughey
Are we seeing any light at the end of the horizon?
00:20:54 Hans Dubois
Well, I think yes, and I think part of that light comes from the Green Transition, and from the European Pillar of Social Rights. It's very clear that Europe realised that there's a big problem which needs a large solution and that part of that solution comes from the EU funds and policy emphasis which at the moment is larger than it has ever been in the past.
00:21:21 Mary McCaughey
Is there enough prioritisation being given to this issue?
00:21:25 Hans Dubois
It appears for whom it’s failing most, it’s the homeless. We looked at data for some of the Member States, it's a very small proportion, it’s 0.2% of the population often, so it would be easily solvable and there's very good examples of how to solve it. Housing first, so first providing housing to people, and then providing services which they may need and not making the housing dependent on the services. It's a very small group but it's relatively easy to solve because it's such a small group. Finland showed that. Finland implemented the ‘housing first’ approach and has reduced effectively homelessness, it's the most evaluated policy measures I’ve ever seen. We map ‘housing first’ policies, small very often in the Member States, like pilots, experiments, but they all have been evaluated, basically, and they all have very good results in terms of people who enter ‘housing first’ do not leave it anymore.

00:22:22 Mary McCaughey
So, Finland would be seen as a best-case scenario, as a leader in the field of dealing with the housing crisis.
00:22:29 Hans Dubois
In terms of dealing with homelessness, and that's, I think, the group where Europe is failing very clearly. There's a way to solve it. Housing first. It's proven by so many policy evaluations. A lot needs to come from the Member States, because the competence of the European Union is only so far in terms of housing, but this is something where I’m really wondering there is a way to solve it, and it's a relatively small group so that should be stepped up in the Member States where there are small pilots going on, the capacity of ‘housing first’ could solve large parts of the homelessness problem.
00:23:09 Mary McCaughey
OK, well, maybe that leads us to the close. Again, it's a fairly dismal picture, I have to say, that you paint of both the access and affordability, quality of housing, but also the picture of what you call there a relatively small percentage but, of course, that percentage operates in a very different way when you translate that to human lives and individuals who are homeless and have no access to housing whatsoever. You could use this period of the podcast. At the end of each one, I would ask you to address your thoughts and your expertise in a way that you were discussing with a policymaker. Talk to me in three.
00:23:54 Hans Dubois
So, we have housing insecurity, people who are afraid of losing their homes. There are cases in Europe where you can learn from preventing people being evicted. For instance, in Sweden, if an eviction notice is issued, automatically support is triggered. So, that is a clear way in which most evictions can be prevented - either people move to a more affordable dwelling, or they can stay in their home. Of course, it's not ideal, because it's better to prevent these problems, and that can be because there are also examples from Vienna, from Amsterdam, where such support is already triggered at an earlier stage, when arrears emerge, from utility arrears or rent arrears. So, that's one, it's good to focus more on prevention of evictions.

But also the Green Transition, it’s good to use these funds for more broadly improving the quality of housing, but, yes, importantly to improve energy efficiency. It also has implications for the affordability of housing, because if people have better insulated homes, they don't need to spend so much on utilities, so they have more money available for other things. The problem is that such measures often do not reach people with low incomes who live in social housing or are private tenants or the lessor needs to be incentivised along with benefits for the tenant. So that's another thing.

Then, I think it's important, when you look at data, you tend to look at the past. I think it's also very important to look into the future. Interest rates are on the increase. They have increased a lot in a very short time. So, people with large mortgages and variable interest rates, they face certain increases in monthly costs. Now, there are big differences in countries in terms of how common variable interest rates are. In Poland almost everybody has variable interest rates, in Belgium almost nobody. So, this is something countries can learn from maybe, but these increasing interest rates in combination with increased cost of living can cause problems for a group which so far had been in a pretty good position: people with mortgages.
00:26:05 Mary McCaughey
Thank you, Hans. I think the last three points that you make show how important it is to have a targeted, customised approach to this in many ways. Because there you're talking about the Green Transition and access to the incentives and subsidies which are available for that, but that they need to be targeted in different ways to different groups for them to really make a difference.

Also, in terms of the housing insecurity, you're talking there about prevention of evictions so that's again looking at the reasons and the rationale behind those evictions and trying to target it in advance in a customised way.

And the third one about interest rates is also very fundamental because there you're looking at people who are safe, relatively safe at the moment. They may be pressed, but they're relatively safe, but change that even a little bit more into the future and we could be looking at a very different situation for that cohort.

So, thank you very much for that. Thank you for your widescale expertise on this topic, which is so important at this stage on the policy agenda. As you know, Eurofound talks many subjects. There are, of course, other titles that you can look at in terms of the work we've done on sustainable work, on gender equality, work-life balance. There's a range on our Eurofound Talks podcast series. You are welcome to download them wherever you get your podcasts and also to follow us on social media and on our website. So, until next time, when Eurofound talks to you.



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