Housing Policy in Europe

Paul Balchin

• Publisher: Routledge
• Year: 2013
• Topic: Politics & International Relations
• eBook ISBN:
  9781134780327
• Subtopic: European Politics
• Index: Politics & International Relations

Housing Policy in Europe provides a comprehensive introduction to the economic, political and social issues of housing across the continent.
The changing policy and practice of housing in fifteen countries from across Northern, Western, Southern and Central Europe are described, analyzed and compared.
The book explains why different systems of tenure are dominant in different groups of countries, and the extent to which housing policies within these countries conform to different welfare systems.
It reveals how owner-occupation has taken over from social housing as the chosen system of tenure and how this reflects a political and economic shift, from social democracy or communism to neo-liberalism across Europe.

1

INTRODUCTION

Paul Balchin

Throughout western Europe, as elsewhere in the world, housing policy reflects the political ideology of the government in power. Despite considerable variations in the aims and objectives of housing policy from one country to another, governments ‘right of centre’ generally tend to favour less state intervention, give only limited support to the social-rented sector, and promote owner-occupation and private landlordism. Governments to the ‘left of centre’ normally accept the need to intervene in the market, give responsibilities and funds to local authorities and non-profit housing organisations to enable them to provide affordable housing, and attempt to ensure that housing resources are distributed fairly equitably across and within tenures. Nevertheless, prior to the formulation and application of housing policy, broad demographic and macroeconomic trends need to be fully taken into account by governments, of whatever political predilection, to ensure that workable and politically relevant solutions are devised for the many different problems of housing market dysfunction.

MARKET DETERMINANTS OF HOUSING POLICY

The underlying factors influencing the level of housing demand or need within a country (aside from state intervention) are essentially confined to its population size and growth, its standard of living as indicated by gross domestic product (GDP) per capita, and expenditure on housing as a proportion of total private consumption. The principal underlying determinant of supply is the overall level of investment in the domestic economy – as measured by gross fixed-capital formation (GFCF) – and, derived from this amount, the level of housing investment. The quantitative and qualitative outcome of this investment includes, for example, the number of dwellings built, the size of the housing stock in relation to the number of households, the number of dwellings per thousand of the population, the area of habitable floorspace and number of rooms per dwelling, and the age and condition of dwellings. Although house prices and rents, the number of housing transactions, and the volume of resources allocated to the production of housing within specific periods of time are determined by the interaction of demand and supply, so too is the pattern of housing tenure – the ultimate outcome of market forces.

THE DEMAND FOR HOUSING

In western Europe the population of countries varies greatly, ranging in 1991 from 384,000 in Luxembourg to 3.5 million in Ireland to 57.8 million in the United Kingdom and nearly 80 million in Germany (Table 1.1), but whereas population size has an influence on the total amount of resources allocated to housing, the rate of population growth is often a more important determinant of housing policy.

Population growth in western Europe from 1945 to 1991 showed a marked spatial variation – being greatest in the Netherlands, Spain, Belgium, France and the former West Germany (with growth rates ranging from 44 to 61 per cent), and being least in the United Kingdom and Austria (with growth rates of only 16 and 15 per cent respectively). In the former East Germany, the population declined by nearly 8 per cent over that period (Table 1.1). The growth in population throughout western Europe in recent decades was attributable less and less to natural increase (both birth and death rates were diminishing, particularly in the 1980s), but in some countries, for example, the Netherlands and West Germany, net immigration from time to time has been the principal cause of growth. In East Germany, however, population decline was a result of net emigration – mainly to West Germany (McCrone and Stephens, 1995).

Table 1.1 Population growth, western Europe, 1945–91

Source: CEC, Demographic statistics

Note: ^a Whole of Germany

The standard of living of countries in western Europe, as indicated by gross domestic product (GDP) per capita, also varied substantially from one country to another – being highest in Switzerland and Denmark with estimated GDPs per capita of over $36,000 and $29,000 per capita respectively in 1995, and lowest in Greece and Portugal with per capita GDPs of only $8,400 and $6,900 (Table 1.2). Relative levels of standards of living, of course, change with time: for example, in the 1970s and 1980s Sweden had the highest GDP per capita in Europe but fell to seventh place by 1995, whereas in the 1950s the United Kingdom had a higher per capita income than any of the other 11 members of the pre-1995 European Union (EU) (Gilbert and Associates, 1958; McCrone and Stephens, 1995).

Table 1.2 Estimated gross domestic product per capita, and expenditure on housing, western Europe

Source: Economist Publications (1994) The World in 1995; CEC, Statistics on housing in the European Community

Notes: ^a Forecast

^b West Germany only

Derived from GDP, the level of private consumption is, in part, attributable to expenditure on housing. There is, moreover, a broad positive correlation between GDP per capita and expenditure on housing as a proportion of total private consumption. As Table 1.2 reveals (albeit in respect of different years), housing expenditure as a proportion of personal consumption exceeded 19 per cent in all countries with GDPs in excess of about $19,000 per capita, whereas in countries with GDPs per capita of about $18,000 or less the proportion of housing expenditure fell to as low as 10.9 per cent (McCrone and Stephens, 1995). It is sometimes suggested that housing expenditure is a reflection of climate; for example, it is argued that Scandinavians spend proportionately more on housing than Mediterranean households because of the greater need for heating in areas of low winter temperatures, but on this basis one would expect Germany and Austria to spend more than the United Kingdom, but the reverse is apparent, while the proportionately lowest spending country is not Italy, Greece or Spain, but Ireland. Personal expenditure on housing is thus undoubtedly determined by complex scales of preference – cultural as much as economic.

THE SUPPLY OF HOUSING

As with GDP per capita and housing consumption expenditure, there were marked variations throughout western Europe in the proportion of the GDP which was invested in recent years – as measured by gross fixed-capital formation (GFCF) (Oxley and Smith, 1993). Tables 1.2 and 1.3 suggest that (with the possible exceptions of Italy, Portugal and the United Kingdom) there is very little positive correlation between the standard of living in 1994 and the annual average level of GDCF over the period 1970–90.

Table 1.3 Estimated gross fixed capital formation, western Europe, 1970–90

	GFCF as a % gross domestic product: av. per annum 1970–90
Luxembourg	26.34
Ireland	23.26
Portugal	23.21
Greece	22.70
West Germany	21.73
France	21.65
Spain	21.47
Netherlands	21.11
Denmark	20.58
Italy	20.14
Belgium	19.40
United Kingdom	18.14

Source: UN Annual Bulletin of Housing and Building Statistics

Spatial variations in housing investment (as a proportion of both total investment and GDP) are also very apparent (Tables 1.4 and 1.5), but again (with the exceptions of the United Kingdom, Portugal and Italy) there is very little similarity between levels of housing investment and variations in GDP per capita (Oxley and Smith, 1993).

Table 1.4 Housing investment, western Europe

Source: UN Annual Bulletin of Housing and Building Statistics

Note: ^a West Germany until 1989

Table 1.5 Housing investment: average per annum, 1970–89

	% gross domestic product
Greece	6.34
France	6.20
West Germany	5.98
Spain	5.82
Ireland	5.67
Netherlands	5.52
Italy	5.51
Denmark	5.22
Belgium	4.52
Portugal	4.22
United Kingdom	3.59

Source: UN Annual Bulletin of Housing and Building Statistics

Undoubtedly, housing investment has been reflected in the volume of housebuilding – with the number of dwellings constructed being proportionately the greatest in Greece, the Netherlands and France and the least in the United Kingdom, Portugal and Italy throughout the period 1972–89 (Table 1.6). Although, by 1991, there was some change in the order of housebuilding at the top (Ireland and Denmark becoming proportionately the largest housebuilders), the volume of housebuilding remained proportionately low in the United Kingdom and Italy (Oxley and Smith, 1993).

Table 1.6 Dwellings constructed, western Europe

Sources: UN Annual Bulletin of Housing and Building Statistics; the Netherlands’ Ministry of Housing, Physical Planning and Environment (1992), Statistics on Housing in the European Community

Taking into account dwellings falling into serious disrepair or being demolished, Oxley and Smith (1993) calculated that net additions to the housing stock also suggested that a low level of housebuilding in the United Kingdom is a reflection of a low level of investment. Net additions to the housing stock (per 1000 population) were greatest in the Netherlands (at 6.8) and lowest in the United Kingdom (at 3.8).

Comparative levels of housebuilding and the resulting size of housing stocks, however, do not by themselves indicate the extent to whic...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• List of figures
• List of tables
• Notes on Contributors
• Preface
• 1 Introduction
• Part I: The primacy of private rented housing
• Part II: The promotion of social housing
• Part III: The dominance of owner-occupation
• Part IV: Housing in transition
• References
• Index