1. Housing systems in Western Europe: Theory and practice
Moscow
Peter Boelhouwer
OTB Research Institute for the Built Environment

2. Content Reasons for government intervention
Housing: wobbly pillar between state and market
Housing and the welfare state
Developments in the owner-occupied and rented sector
Emerging trends on the housing market before the economic crisis
Housing markets and the economic crisis
Housing market crisis: what to do?
Conclusions

3. Reasons for government intervention
The right of decent housing is a fundamental right (constitutional law and universal declaration of the rights of human beings)
Government is responsible for sufficient affordable, qualitative descent housing on the right place
Minimum quality level
Content: place, production, affordability, distribution, quality

4. Housing as the wobbly pillar of the welfare state: Harloe/Thorgersen
Absence of standard
Definition of housing need
Changes in achievements
Broad government goals/ connection with other policy areas

5. Main Characteristics of the welfare state
De-commodification
Influence of central government
Degree of political corporatism
Fragmentation in the provision welfare services
Treatment of the traditional family in welfare politics
Role of the state, market and family in the provision of welfare services

6. Development welfare states (2)
Criticism on welfare states
Budgetary problems
More emphasis on the market and freedom of choice
Enabling state
Empowerment, privatization, responsibility

7. The three criteria of Esping-Andersen applied to housing

8. Differences between the housing systems of the three welfare state regimes (1)
Criterion
Social-democratic
Corporatist
Liberal
De-commodification
large
quite large
low
Stratification
relatively low
high, mainly based on social status
high, mainly based on income
Mix of State, market and family
dominant position of the State
important position for the family
considerable influence for private non-profit organizations
dominant position of market parties
State regulation
strong central government influence
functional decentralisation, incremental, problem-solving policies
relatively little State regulation (at both central and local levels)
General housing policy objectives
guaranteed universal high level of housing quality
preservation of the social stratification in society
preferential treatment of the traditional family
stimulation of households and other private actors to take initiatives on the housing market
dominant position for the market
State only supports marginal groups

9. Differences between the housing systems of the three welfare state regimes (2)
Criterion
Social-democratic
Corporatist
Liberal
Subsidization
large–scale production subsidies
subject subsidies for large target groups
segmented subsidies; specific arrangements for specific groups
means-tested subject subsidies
few production subsidies
Price setting and price regulation
strong State influence on price setting and price regulation
moderate State influence
State regulation of prices to correct negative effects of the market
market determination of house prices
Housing allocation
allocation on the basis of need
State intervention to correct the market
certain groups may be favoured in the allocation process
market determination of housing allocation in a large part of the housing stock
regulated allocation in a small part of the housing stock. (reserved for low-income groups)

10. A proposed new conceptual model for the welfare state

11. Main characteristics of the four welfare state regimes according to the modified theoretical framework
Labour-led corporatist
Conservative- corporatist
Modern corporatist
Liberal
De-commodification
high
relatively high
low
Influence of central government
high and direct
quite high and often indirect
Degree of political corporatism
many corporatist structures and processes
few corporatist structures and processes
Fragmentation in the provision of welfare services
fragmentation on the basis of measurable criteria
fragmentation on the basis of occupation and/or social status
fragmentation on the basis of measurable criteria.
Treatment of the traditional family in welfare policies
no preferential treatment for the traditional family
preferential treatment for the traditional family
Role of State, market, and family in the provision of welfare services
dominant position of the State
important (if not dominant) position of the family
welfare services are provided by both market and State
dominant position of the market

14. Policy for social renting (1)
England
Flanders
France
Principal purpose of social renting
Safety net for low-income households
To build and provide social rental dwellings and to revalue the housing stock (right to decent housing)
To provide affordable housing to households on low incomes
Allocation system
According to need
Rent regulation for new contracts
According to policy prescription
Rents based on tenants’ income and market rent (Flemish policy formula)
Rent setting depends on contract between government and social landlord
Rent regulation for rent adjustment
Policy to link rents to quality and local incomes in the longer term
Adjustments in line with household income
Influenced by the government
Regulation and supervision of landlords
By Office of Tenants and Social Landlords
Flemish government: supervision and registration. Sector organisation, VMSW: finance and guidance
Supervised by central government organisation: MIILOS, financial supervision by Caisse des Dépôts
Bricks-and-mortar subsidies
Available
Tax concessions
Available; depends on legal status landlord
Housing allowances
Implicit via income-related rents
Socio-economic profiles of tenants compared to market renting
Lower incomes
Lower incomes and weaker social profile
Relative concentration of low-income households

15. Policy for social renting (2)
Germany
Ireland
Netherlands
Principal purpose of social renting
To rent the households up to certain income limits
House those unable to afford market sector housing
To house people who are unable to find an appropriate dwelling for themselves
Allocation system
According to need
Rent regulation for new contracts
Contract between subsidy provider (municipality) and landlord
Income-related rents; each council has its own scheme
Regulated sector: based on quality points. Unregulated sector: market rents
Rent regulation for rent adjustment
Contract between subsidy provider and landlord
Adjustments in line with household income
Regulated sector: annual maximum rent increase set by government
Regulation and supervision of landlords
Depends on organisation type
By central government
Social Housing Management Decree for housing associations. External supervision by Minister
Bricks-and-mortar subsidies
Available
Tax concessions
Available; variations between local authority and housing associations
Not available as of 2008
Housing allowances
Not available
Socio-economic profiles of tenants compared to market renting
Probably relatively more lower incomes presently than in the past
Low incomes
Relatively strong in lower and middle-income deciles

16. Policy for market renting (1)
England
Flanders
France
Allocation system
Free market
Free market (except for the intermediate sector)
Rent regulation for new contracts
Mainly free market
Free; based on old rent or on reference dwellings in case of renewal of a contract for a sitting tenant
Rent regulation for rent adjustment
Based on market conditions
Based on index of costs, a corrected consumer price index
Based on index of costs
Regulation and supervision of landlords
Selective; by local authorities
Depends on organisation type
Bricks-and-mortar subsidies
Not available
Available for intermediate sector
Tax concessions
Tax treatment similar to other investors
Available
Housing allowances
Explicit subsidy for movers to higher quality or more suitable dwellings
Socio-economic profiles of tenants compared to social renting
Higher incomes
Higher incomes and stronger social profile
On average higher incomes than in social renting but also greater spread

17. Policy for market renting (2)
Germany
Ireland
Netherlands
Allocation system
Free market, waiting list for each landlord
Free market
Allocation of cheap stock regulated in case of housing shortages
Rent regulation for new contracts
Free market, unless usury rents
Regulated sector: based on quality points
Rent regulation for rent adjustment
Based on reference rents
Annual reviews; based on market conditions
Regulated sector: annual maximum increase set by government
Regulation and supervision of landlords
Depends on organisation type
By local authorities; and through statutory registration with PRTB*
Bricks-and-mortar subsidies
Not available
Tax concessions
Available
Selective fiscal incentives
Exemption from corporate tax for institutional investors
Housing allowances
Tax concessions for rental payments
Socio-economic profiles of tenants compared to social renting
No recent information found
Mean incomes nearly twice social sector levels
Relatively strong in the lowest and highest income deciles
* PRTB = Private Residential Tenancies Board

18. Key housing policy statements (Norris and Shiels) (1)
Netherlands: accelerate restructuring neighbourhoods and housing production, sustainable living climate, promotion of home-ownership, ensure affordability
Belgium: promoting home ownership and provision of sufficient social housing
Germany: promote home ownership and devise the range of housing policies necessary to address the increased regional differentiation of housing markets

19. Key housing policy statements (Norris and Shiels) (2)
France: to house every person according to her/his wishes, action must be taken on each link in the housing chain. This includes: facilitating home ownership and stimulating private rental and social housing output
England: increase the provision of high quality and affordable housing in areas of high demand and tackle the housing shortage in London and the South East
Sweden: housing policy aims at the supply of high-standard, affordable housing

20. Key housing policy statements (Norris and Shiels) (3)
Denmark: good and healthy housing for all.
Austria: housing as a basic human need should not be subject to free market mechanism
Spain: increasing the proportion on rented dwellings in the Spanish housing stock
Slovakia: differentiated state support for construction intended for the various income groups within the population
Slovenia: construction of new dwellings annually, to meet all housing needs

21. Cross-cutting housing challenges (Lawson & Milligan)
Rising housing costs and declining housing affordabilty
Housing supply shortages and issues of housing quality
Social exclusion and segregation related to housing location, tenure and quality and race and ethnicity
Special housing needs of excluded groups, indigenous communities and those with support needs.

22. National policy responses (Lawson and Milligan)
Facilitating home ownership for new entrants and lower-income households
Promoting private investment in affordable housing
Using the existing private rental market
Reinventing social housing
Promoting housing and neighbourhood sustainability

23. Developments in governance and delivery in housing systems (Lawson and Milligan)
The complexity, volatility and greater differentiation of housing markets within regions and countries
Neo-liberal agenda’s such as public sector reform and privatisation
Growing acknowledgement that conditions of privatisation need to change, as simple formulations of less government and more market are not working
The influence of international agencies (EU directives on competition issues and overcoming regional disadvantages)

24. Most successful international responses to emerging housing issues (Lawson and Milligan) (1)
Housing as an integral part of social, economic and environmental policy
Sufficient housing expertise (good institutions)
A long-term commitment to achieving desired housing outcomes
A well designed mix of market and non-market mechanisms
A climate where diversity, flexibility and local innovation can flourish

25. Most successful international responses to emerging housing issues (Lawson and Milligan) (2)
Comprehensive and up-to-date market analysis and policy-orientated evaluation strategies
The adoption of balanced multi-tenure policies with a common focus on increasing affordability and sustainable housing options, improving tenure choice and pathways and supporting socially mixes communities.

26. Emerging trends (1): General improvement in housing conditions (Whitehead)
No numerical shortage
Average standards of housing rising in most European countries (except transition economies?)
Lower inflation and nominal interest rates
Average financial housing costs stable or falling in most countries
But growing problems of access and affordability
Increasing regional and urban differentiation

27. Emerging trends (2): House prices (Whitehead)
House prices have been rising sharply in real terms across Europe over most of the last decade (starting to slow down)
Rises out of line with incomes
- impact of structural changes in inflation and interest rates
- speculative bubbles or underlying economic growth/constraints?
- housing as a asset class
Major exceptions, Germany, Austria en Switzerland

28. Emerging trends (3): Role of private sector finance (Whitehead)
Particularly in northern Europe where housing finance instruments highly developed
Development of mortgages backed securities/ bond issues (Denmark in forefront)
Use of private funding to support social sector housing
Use of housing to support other borrowing, growth of re-mortgaging, interest only loans etc.

29. Conclusions: perspectives (Whitehead)
Average households already in owner-occupation are benefiting from greater choice, flexibility and stability
Marginal purchasers and new entrants face major access and affordability problems
Impact of inheritance and issues of intergenerational equity
Concerns about systemic risks in the housing system
- US current experiences
- Impact of broader economic downturn
Longer term issues relating to the use of housing assets
Inflexibility of owner-occupation as dominant housing tenure for labour market, urban regenerating as well as the housing market itself

30. Economic and housing market indicators by country
Bel
Ger
IRL ES F NL AT SW UK
General economic indicators
Growth GDP 2009
-2.9
-5.0
-7.5
-3.6
-2.2
-4.5
-3.7
-4.9
Growth GDP 2010
0.6
1.2
-1.4
-0.8
0.3
1.1
1.4
0.9
Unemployment average 2007 – 2009
7.5
7.7
12.5
8.5
3.2
4.4
6.9
5.5
Unemployment latest (jan 2010)
8.0
13.8
18.8
10.1
4.2
5.3
9.1
7.8
Housing market indicators
House price change Mid 2007 – mid 2009* 0%
-12%
-23%
-7%
-6% 1% 6%
-18%
Latest house price trend up
stable
Down (rapidly)
Transactions
-4%
-2%
-36%
-33%
nav
-10%
-11%
-46%
Building permits
-3%
-20%
-60%
-17%
-1%
-16%
Construc-ting new series
*Mid 2007 the house prices in most countries reached their highest levels; mid 2009 is the year where most nations have data available.
Note: Germany and Belgium = single family dwellings
Source: GDP and Unemployment = Eurostat; House price change = national statistical
bureaus and Hypostat 2008; Transactions = Hypostat 2008; Transactions
latest is national sources.

31. Measures taken
Protection of home owners: avoiding payment problems and eviction
Stimulating demand for a new existing owner occupied homes by households
Stimulating social/public housing associations to take on unsold completed new dwellings initially targeted for owner occupation
Stimulating production of social/public rental dwellings as an anti-cyclical measure for the construction sector

32. Crisis measures what to do and what not to do?
Number of countries have taken only limited action
Extra protection for home owners to avoid repossessions
Attempts to get rid of the overhang/unsold dwellings
Stimulating demand for newly constructed dwellings
Building of new social housing
Buying unsold new dwellings by social landlords
Unlimited speculative building and a laissez faire attitude on planning
Differences in the structure of the housing market are quite important to explain the crisis and measures

33. Sensitivity of housing markets to the economic climate
Dynamic markets or more sensitive than static markets
Effects of crisis are strongest in England and Ireland: limited stabilizing factors through government policy or via financial industry, buildings are built speculatively and in Ireland few planning restrictions
Dutch market for new houses has been hit hard
Germany prices of existing dwellings show a strong decline
Belgium least trouble form the economic crisis

34. Conclusions
Countries that are severely affected by the crisis are also confronted with the largest problems on the housing market
Difficult to establish the effects of the economic crisis and the effect of the structure of the housing market and stabilizing factors
Possible relation to the general economic structure and the housing market structure: a nation that is highly sensitive to the general economic climate also has a housing market structure that is sensitive to the economic climate

35. End