How the COVID-19 Pandemic has Exacerbated Europe’s Housing Crisis
Sandrine Jacquot, Online Staff Writer
April 5, 2021
Since the 2008/2009 financial crisis, access to affordable housing in Europe has become increasingly difficult. In Europe, various state government response strategies to the crisis were mainly centred around increased borrowing, offset by austerity measures, or spending cuts, and increased taxes. However, these measures have been unable to prevent rent prices from rising, affecting the lower and middle income classes the most. Fast forward to 2020, and the onset of the COVID-19 pandemic has only aggravated consequences of and factors contributing to the affordable housing crisis in Europe. Many are increasingly questioning the future of the rental market in Europe due to this ongoing crisis: If these dangerous trends continue, how will a post-pandemic European economy cope with the increased demand for social housing?
The European housing crisis is primarily described as the cost of rent and housing prices rising faster than incomes. While there are many factors causing the increase in rent and housing prices, issues of limited housing supply, the purchasing of properties as financial assets, and increased tourism demand for Airbnb options have played a large role in the upward push on prices. Although the crisis affects each country in Europe differently, over the past three years, housing prices in Europe have increased by an average of 5%.
Before the COVID-19 pandemic, a lack of affordable housing affected roughly 82 million people in Europe. However, numbers could be higher as housing insecurity can be difficult to quantify and is not always visible. The housing crisis in Europe is becoming an increasing concern for middle income earners, while lower income earners remain a vulnerable group exposed to the volatilities of the market. Other vulnerable groups may include single parents, large families, and people with precarious employment. Further, there are broader differences between Eastern and Western Europe: generally, the poor in Western Europe face higher monthly housing costs, but more households in Eastern Europe experience severe housing deprivation. In this instance, poor is defined as earning less income than 60 percent of the national median. Because of this housing crisis, homelessness is increasing in almost all member states of the European Union: Ireland has seen a rapid increase in homelessness, while in France, deaths in homeless shelters have doubled in the past three years.
Social housing; housing subsidized by the government, is an important support for vulnerable populations facing homelessness, evictions, or housing precarity. With this housing crisis, increasing privatization of social housing has led to long waitlists for people trying to access social housing services. Add the COVID-19 pandemic, and the demand for social housing will, and has, increased as the economic downturn hits Europe and suppresses wages and as renting has become more unaffordable.
Despite the pandemic causing housing prices to decline in varying extents, rising unemployment and decreased access to finances has exacerbated affordability. Already vulnerable groups will be exposed to more risk, as young and low-income people will be more likely to lose jobs and have a reduced income due to the pandemic. With nowhere else to turn, these vulnerable populations will likely seek out social housing as a solution, further adding to its growing demand. Alternatively, European governments are facing a number of fiscal pressures caused by the pandemic, and therefore they will have a more limited capacity to fund and support new social housing to meet the rising demand.
Not only is access to affordable housing itself a significant problem across Europe, but access to quality housing adds another layer to the crisis. Having access to sanitation and sewage, reliable energy sources, and high quality drinking water is important for people’s health, and many may settle for less due to affordability. This problem is particularly prominent during the pandemic, as people are forced to spend lockdown in poor quality or overcrowded homes, putting them further at risk for health issues. People facing homelessness are 20 times more likely to be infected with COVID-19 than the general population. Thus, the pandemic will exacerbate housing shortages and homelessness, furthering Europe’s housing crisis and causing adverse social problems.
European government responses to the housing crisis in relation to COVID-19 have varied based on the country. Many governments have implemented temporary policies to ease many burdens for their populations: the Portugeuse government temporarily suspended evictions and the city of Vienna also prohibited evictions in the private rental market sector during the pandemic. Many policies are implemented at a municipal level, as Bilbao, Spain has created a housing support scheme for young people, and Riga, Latvia has programmes for individuals with specific needs such as disabilities or are at retirement age. Generally, government supports follow the trend of eviction moratoria, emergency shelters for those experiencing homelessness, tax payment deferrals, and freezing rent payments.
However, broader and more long-term solutions to address Europe’s housing crisis vary. The current solutions amidst the pandemic present policy trade-offs, but strategies are nonetheless necessary. Some organizations take a more market-based approach, like the Organisation for Economic Co-operation and Development (OECD), arguing that temporary measures are impacting the long-term economic resilience of Europe, and that governments should ease land and environment restrictions, as well as increase capital, to boost construction activity. Other organizations like Eurocities are pushing more social solutions with the ‘Housing First’ approach that provides homeless people housing upfront without having to go through other emergency measures first. Regardless of consensus on solutions, one thing is certain: measures must be taken to address this growing problem, not just in Europe, but around the world.