The development of the housing situation in individual countries is influenced both by their governments’ housing policy and by a number of external factors, such as the socio-economic and demographic situation and political, administrative and legal factors (Boelhouwer and van der Heijden 1992: 266–267). These external variables, together with the housing policy, shape the role, aims and characteristics of social housing. The following review refers especially to Central and Northern Europe. The development of housing policy and social housing in most Southern European countries has, to a certain extent, been different because of delayed urbanization and stronger rural settlement, which have resulted in the governments’ of these countries being less involved in housing. From the beginning of the twentieth century up to the Second World War, the development of housing policies in Western Europe was characterized mainly by market forces. Public involvement in housing markets was rather weak and temporary, and housing efforts in many large cities were aimed at poor households. This situation changed noticeably after 1945, when governments became much more active in the housing area in most European countries. The development of housing policies in Western Europe from 1945 until the 1990s can be split into three phases (Priemus, Kleinman, Maclennan and Turner 1993). The first phase of “recovery” (1945–60) was aimed at repairing war damage and alleviating housing shortages; the main issue was housing construction, which was heavily subsidized or financed directly with public funds. The result was termed “mass” social housing.

The second phase of “growing diversity” (1960–75) brought new issues – mainly a focus on housing quality and urban renewal. This period saw the emergence of major divergences in the way that governments adjusted their housing policies to overall economic prosperity in the 1960s.2 Home ownership now joined social housing on the political agenda. The third phase of “new realities for housing” (1975–90) resulted from the changing economic context. Beliefs concerning the role of the state in housing provision began to change, and in most countries, this resulted in a reduction in public housing expenditure. In general, housing became “more market-oriented, competitive and opened up to economic pressures” (Priemus, Kleinman, Maclennan and Turner 1993: 19).3 While the phases of housing policy development outlined above do not cover the past 15 years, there is strong evidence that recent trends have persisted through the 1990s and into the current century. There has been a general decline in public investment in housing and a shift from generic to specific subsidies, which target the weakest socio-economic groups (Boelhouwer et al. 1997: 509).4 The concept of housing provision has been partly modified so that the main function of housing policy has begun to be perceived as facilitation and enablement, and in the prevailing market conditions, the focus has been on economic effectiveness and social efficiency.