Source: European Investment Bank
Anselm Leahy sits at a table in the white, pristine kitchen of his new Dublin apartment. “When I first came into the apartment, I was astonished. I couldn’t believe it,” he says, gesturing toward a big bay window in the living room that overlooks nearby houses and green fields. “I was over the moon.”
The apartment is part of new social housing built by the Focus Ireland Association, a state-run institution that provides loans to developers building affordable homes across the country. Leahy moved in just under two years ago, ending a spell of homeless that began with the death of his father and his mother’s subsequent move into a retirement home. “My will to live was very, very low,” Leahy says. “To get this apartment has changed me in lots of different ways: mentally, physically, spiritually. I feel human again. I feel like I have a future. I have hope.”
Cities like Dublin suffer from a shortage of affordable housing that has blocked many people – the unemployed, low-income families, migrants and young workers – out of the market. Over the past 15 years, average rents in the European Union have risen by one-quarter and house prices by half, while one in ten Europeans now spend 40% or more of their disposable income on housing.
At the same time, the share of social housing in total supply has shrunk since 2010, even though the number of vulnerable people such as the homeless or new migrants has risen. Half of Europe’s housing stock was built before 1980, and much of it needs to be renovated. Many buildings are energy inefficient (a rating of D or worse). Bringing those homes and apartments up to new EU standards will be expensive and slow.
The lack of affordable housing translates into real hardship: young people put off starting families, students turn down the best universities, essential workers like teachers or nurses don’t accept jobs in in major cities – all because they are priced out of housing.
“These people and their stories provide living proof of the housing crisis and the impact it has on Europe,” said Dan Jørgensen, the EU Commissioner for Energy and Housing, at a housing event hosted by the European Investment Bank (EIB) in early March. “It threatens social justice and social cohesion … It weakens our economy and reduces our competitiveness.”
The problem is clear: Over the last decade or so, housing demand has outstripped supply and incomes haven’t kept up with prices. The solution, however, is much more complicated. The European Union needs to build almost one million new dwellings. That requires:
- innovative, faster and less costly ways of building;
- regulatory reform to speed up permitting and to create the investment framework for housing providers to deliver affordable new apartments and homes;
- financing solutions that encourage residential development and renovation.
“We need to enhance the housing supply while also making better use of the stock we already have,” says Chiara Fratto, a European Investment Bank economist who researches housing issues.