Global-Social Housing: A Key Part of Past and Future Housing Policy
Introduction:
Rising housing prices, stagnating wages, demographic pressures, and declining public investment in social housing in many countries are increasingly challenging housing affordability in many OECD and non-OECD European Union (EU) countries. Between 2005 and 2019, real house prices increased in 31 OECD countries, and rent prices rose in all but two OECD countries.
Moreover, since the Global Financial Crisis, house prices have risen faster than incomes in 21 of 33 OECD countries for which data are available. These trends have made it harder for households to afford to house. Indeed, while there have been some improvements in recent years, more than a third of low-income renters spend over 40% of their disposable income on housing, on average in the OECD, and are thus considered overburdened by housing costs.
Social housing models differ across countries:
What is social housing?
In OECD and non-OECD EU countries, social rental housing represents more than 28 million dwellings and, on average, around 6% of the total housing stock.1 Yet there are significant differences across countries in the definition, size, scope, target population and type of provider of housing.
Housing can be distinguished from the more encompassing term, affordable housing, which refers to rental and owner-occupied dwellings that are made more affordable to households through a broad range of supply- and demand-side supports (including housing allowances or vouchers, subsidies or tax relief to first time homeowners). The range of measures at governments’ disposal to make housing more affordable will be profiled in a forthcoming OECD policy brief on affordable housing.
How big is the social housing sector?
The size of the housing stock varies widely across countries Bearing in mind the differences in definition, the size of the housing stock differs considerably from one country to another. At one end of the spectrum, housing represents over 20% of all dwellings in three countries (the Netherlands, Denmark and Austria), and, by design, has historically been home to a relatively broad cross-section of low- and middle-income households. While, housing accounts for between 10% and 19% of the total housing stock in five countries (the United Kingdom, France, Ireland, Iceland and Finland), in most OECD and EU countries, it accounts for less than 10% of the total stock.
Who lives in social housing?
Most – but not all – social housing sectors target low-income and some vulnerable households One key difference across housing systems is the population that is targeted or eligible for housing. Today, in many countries, housing is intended for households that cannot otherwise afford market-rate housing, even though historically, this has not always been the case (see, for instance, Pearce and Vine and Hoekstra. In general, housing policies in Europe have transitioned to more market-oriented models over the past half-century, yet the housing sector has evolved very differently from one country to another.
Who provides social housing?
A range of providers, though sub-national governments dominate social housing delivery housing providers are varied: depending on the country, housing may be developed and administered by public, private or non- or limited-profit entities, co-operatives or a mix of providers. In several countries, housing represents a significant share of the overall rental housing stock and a key “third sector” in the housing market, operating alongside the public and for-profit sectors. This diversity reflects the complex governance of housing policy more generally, which tends to span numerous ministries and levels of government.
How is social housing financed?
The financing of housing takes different forms and tends to involve a variety of sources and contributors. Three main sources can help fund social housing:
1) rental income from tenants;
2) borrowing by the social housing provider;
3) payments and/or subsidies from others, including governments.
Governments are indeed one key source, and may support the social housing supply through the direct provision of social housing, or by providing grants, tax credits, loans and/or loan guarantees to housing providers; in many cases, local governments may supply land for social housing development at discounted prices.
Increasing affordability challenges and demographic change:
Urbanization, intensified migration towards many European cities in recent years, as well as population ageing have put additional pressure on housing markets and social welfare systems. Indeed, a larger share of elderly tenants in housing implies a need to adapt the dwelling, surrounding environment and support services to residents’ changing physical needs and capabilities. More broadly, an ageing population means a potentially smaller workforce and increasing pressure for public pensions systems.
Conclusion:
The future of social housing will continue to be shaped by changing demographics, socio-economic and environmental realities, housing market evolutions and the changing nature of work, as well as policy decisions as countries chart a path towards economic recovery. Against the backdrop of these longer-term structural trends, the COVID-crisis provides a major opportunity to address the housing affordability crisis that existed well before the pandemic. There is a need for renewed public investment in social and affordable housing, including substantial investments in the construction and expansion of the housing sector.
Also Read: Redevelopment, Subjectivity, and Difference in Mumbai’s Slum Frontier