The New Housing Shortage

Housing Affordability in Europe and the USA

Graham Hallett

• Publisher: Routledge
• Year: 2021
• Print ISBN:
  9781032003832
• eBook ISBN:
  9781000388510
• Topic: Sciences sociales
• Subtopic: Géographie

Originally published in 1993, this book is a detailed comparative examination of the housing issue by housing experts, looking at the USA, UK, Germany, the Netherlands and France. The volume offers an excellent blend of critical analysis and practical policy recommendations, including a better targeting of tax concessions, a move back to social housing more diverse than in the past and measures for reducing homelessness. Perennial issues which remain as pertinent today as when the book was first published are also discussed: homelessness, housing affordability for people on low incomes, changes in housing markets.

1 Introduction

National similarities and differences

Graham Hallett

The countries in this study have many similarities in their economic and housing systems, together with some significant differences. The USA, UK, Netherlands, France and the ‘old’ German Federal Republic are highly developed industrial economies. The German Democratic Republic was also an industrial economy, generally considered to be the most successful of the socialist East European states. Because of its very different economic system, it cannot be readily compared with the other countries, although there are some points of comparison.

All the ‘Western’ countries have housing systems which are largely market-orientated, but with substantial degrees of state intervention. In a (pure) market economy, people get the housing they can pay for; if they are very poor, they will get little housing, or even no housing. This harsh rule is modified - to varying degrees in the Western countries studied - by income-support, housing allowances, tax concessions and the provision of subsidized housing (called ‘public housing’ in the USA and ‘social housing’ in continental Europe and, increasingly, in the UK). In other words, in the provision of housing, market principles are modified by public action. In the German Democratic Republic, on the other hand, housing was, in theory, allocated according to need, irrespective of ability to pay; the government prided itself on having avoided the differences in housing conditions between rich and poor which characterized the West.

Macro-Economic Performance

Economic growth, inflation and unemployment can all affect the housing market and the housing conditions of the less well-off. The 1980s saw continued economic growth - at slightly higher rates than in the 1970s in the USA and the UK, and significantly lower rates in France, West Germany and the Netherlands (Table 1.1). In terms of real income per capita, the USA, in the mid-1980s (in spite of all the talk about its relative decline) was still some 30 per cent above the average of the West European countries. In Europe, West Germany had a slight lead over the other countries, but they were grouped fairly closely together. Unemployment rose sharply in the European countries in the 1980s, compared with the previous decade. The rise in the USA was smaller and, during the 1980s, the USA had lower rates of unemployment than the UK, the Netherlands and France. Inflation in all countries was lower in the 1980s than in the 1970s, but these averages conceal some large year-to-year fluctuations.

Table 1.1 Macro-economic performance

	Economic Average, 1970-9	Growth^* p.a. % 1980-9	Unemployment Average, %		Inflation Average, p.a. %		Real Income per capita. USA = 100 mid-1980s
	1970-9	1980-9	1970-9	1980-9	1969-78	1978-90
USA	2.0	2.3	6.2	7.0	6.6	6.0	100
UK	2.2	2.5	4.5	10.7	12.4	7.7	66.1
Netherlands	2.2	1.3	3.9	9.6	7.3	2.9	68.2
France	2.9	1.5	3.9	9.0	8.6	7.4	69.3
W. Germany	2.7	1.8	2.3	6.1	5.0	3.0	73.8

^* Growth of real GNP per capita

Source: OECD, Economic Outlook; World Bank, World Development Report, 1990 p. 237.

Housing conditions and housing systems

The countries studied can be crudely divided, according to their housing systems, into three groups. The West European countries have a good deal in common in their housing policies and tenure patterns, although the UK stands apart in some respects. The German Democratic Republic was very different, because of its comprehensive state socialism. The US housing system is at the other end of the spectrum, being predominantly ‘private enterprise’ -although underpinned by the Federal Government through tax relief on mortgage interest, housing allowances, and the underwriting of mortgages and of the Savings and Loan Associations.

Tenure patterns still show substantial national differences, despite some convergence. The UK has the highest levels of owner-occupation, at 67 per cent, followed by the USA (64 per cent) (Table 1.2). In the USA, higher costs of homeownership led to a fall in the percentage of owner-occupation in the 1980s (see Table 2.5). In the UK, the percentages have risen steadily; the 1987 Conservative Government set a target of 80 per cent for the year 2000. In the ‘continental West European’ countries, the percentages have risen but, at 40, 44 and 51 per cent, are significantly below the British level.

Table 1.2 Housing tenure 1988/90

	UK %	USA %	W. Germany %	France %	Netherlands %
Owner-occupied	67	64	40	51	44
Private rented	7	33	45	26	13
Social rented	26	3	15	23	43
TOTAL	100	100	100	100	100

Source: UN. ECE and national statistics.

Table 1.3 Construction in the public sector as a percentage of all housing construction

	1975 %	1985 %	1988/190 %
USA	1	0	0
UK	52	21	14
FRG	19	11	28
GDR	88	82	86
Netherlands	40	41	37
France	30	53	35

Source: ECE and national statistics

Table 1.4 Mortgage debt/GDP ratios

	1982 %	1989 %
UK	32.1	58.3
US...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Table of Contents
• List of figures
• List of tables
• Contributors
• Preface
• Acknowledgements
• 1 Introduction: National similarities and differences
• 2 The new housing shortage: the problem of housing affordability in the United States
• 3 Housing tenure and affordability: the British disease
• 4 Housing affordability in the Federal Republic of Germany
• 5 Housing problems in the former German Democratic Republic and the ‘New German States’
• 6 Housing affordability in France
• 7 Low income and housing in the Dutch welfare state
• 8 The new housing shortage: an international review
• Index