Strategies and instances of European urban centers tackling affordable housing: a review
Big Changes in European Housing: A Peek at Rising Costs, Short-Term Rentals, and More
Housing markets across Europe have seen some major shifts, leaving rental properties under the mercy of speculators, vacancies, and short-term rentals on platforms like Airbnb. Here's a quick rundown of the issues on tenants' minds and steps some cities are taking to solve these problems.
Rising Housing Costs: A European Perspective
Be prepared for some shocking stats: housing prices and rents surged by a staggering 4.9% and 3.2% respectively in the last quarter of 2024 compared to the same period in 2023 [2]. Counties such as Hungary and Estonia have witnessed house prices more than tripling since 2010, and rents have followed suit [2].
Baked into these rising costs is speculation and real estate investment, which has pushed prices higher, making it tough on local residents [1].
Rental Affordability: A Major Conundrum
With housing prices and rents continuing to soar, affordability has become a significant concern, particularly in Central and Eastern European countries [2]. The rise in housing costs can cause serious strain on family budgets.
Short-term rental platforms like Airbnb are also to blame for reduced long-term rental options, further threatening affordability by limiting the supply and boosting prices in desirable areas [5].
Airbnb's Dominance: Cities Take Action
In many cities, Airbnb has led to a decrease in available long-term rentals, as landlords convert properties to short-term rentals for higher yields. This has contributed to rising rents and affordability issues for residents.
Cities like Barcelona, Amsterdam, and Berlin have countermeasures to limit Airbnb rentals and preserve housing options for locals, aiming to maintain community stability [3].
The Supply Issue: A Hurdle for Housing
The construction sector in Europe is still wrestling with the aftermath of the financial crisis, with a scarcity of skilled labor and reduced investment affecting supply [5].
There's a burgeoning interest in alternative assets and value-add investments, which could lead to more strategic refurbishments and repositioning projects in the real estate sector [4]. This trend could potentially challenge speculation by focusing on sustainable and centrally located properties.
A Green and Flexible Future
Sustainability, flexibility, and centrally located spaces are now high on investors' lists. Upgrading and repurposing existing properties in line with these requirements can help alleviate the speculative pressures [4].
Governments are taking action too, introducing policies aimed at tackling speculative rentals and ensuring housing remains affordable for residents. Measures include caps on short-term rentals and taxes on vacant properties to discourage speculation [3].
All in all, European housing markets confront substantial challenges related to affordability, speculation, and short-term rental platforms' impacts. Balancing market forces with regulatory frameworks is essential to ensure housing remains affordable for residents [3].
Sources:
- The Guardian
- Eurostat
- CityLab
- Preqin
- Bloomberg
- Cities like Berlin are taking steps to address the economic and social policy concerns of tenants, with measures to limit Airbnb rentals and preserve housing options for local residents.
- In the housing-market, the surge in housing costs and rents, particularly in Central and Eastern European countries, poses a significant challenge to the affordability of homes for many tenants.
- The financial crisis has had an impact on the construction sector in Europe, causing a scarcity of skilled labor and reduced investment, which in turn affects the supply of homes for tenants.
- To tackle speculative pressures in the real estate sector, governments are introducing policies such as caps on short-term rentals and taxes on vacant properties, which aim to make housing affordable for tenants.
- Investors are becoming increasingly interested in value-add investments and sustainable projects in the home-and-garden sector, which could potentially lead to more strategic refurbishments and repositioning projects in the real estate market.
- To ensure a green and flexible future for European housing markets, urban policies should focus on balancing market forces with regulatory frameworks to promote sustainable, centrally located properties while maintaining affordability for tenants.
