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Section 4 Outcomes Outcomes Section 4 annual demand for new housing construction in the end of 2002, the number of households in the country country and the lack of renovation and modernisation and cross-frontier immigrants seeking better living former West Germany is approximately 290,000 exceeded the number of dwellings by about 5%. The of older stock has encouraged the population to seek conditions. In Belgium, demand is high in areas housing units for the period up to the year 2015. The Slovenian government estimates that, in the short term, new, more sustainable dwellings. bordering the Netherlands, partly as a result of Dutch corresponding figure for the former East Germany is 20,000 to 50,000 dwellings. In 2002, annual building there is a shortage of about 30,000 dwellings while the current annual level of new housing construction is 4.5.2 Micro-Level Demand nationals purchasing housing in this country, and in the centre of Brussels as a result of the recent output was 290,000 dwellings. The most recent survey about 7,000 units. In Bulgaria it is estimated that only gentrification of the inner city, as increased numbers of of housing demand carried out in the Netherlands 8 to 10% of households in need of housing have the As mentioned above, the vast majority of the 28 higher income households are now moving there. In all found that the urgent housing shortage amounted to financial means to purchase and no more than 10% countries examined in this review reported localised European countries, housing demand is strongest is more than 166,000 dwellings in 2002, which is 2.5% have adequate income to rent in the current market. In housing shortages, which affect specific regions of the those areas where economic activity is greatest and in of the housing stock. This is an increase from the Estonia, it is estimated that 92,000 new dwellings will country or parts of the housing market. the vast majority of countries this occurs in the towns previous survey, carried out in 1998, which estimated be required between 2003 and 2013 in order to meet and cities: the housing need at 85,000 units. In Belgium demand is currently estimated to be 47,450 units per annum, whereas 45,000 new homes were supplied in 2003. From the perspective of demand for housing, the United Kingdom, Ireland and Luxembourg constitute an exception to the norm in the long-standing EU members. Population projections for the UK indicate demand, while projected housing supply over this period will only be 34,000 dwellings – half of which will replace existing housing units. In many of the new EU member States and applicant countries significant problems of affordability have emerged. These problems are discussed in more detail in Section 4.8 below. In Belgium, the housing storage is concentrated amongst specific household types. This includes: singleparent families (particularly those living in cities and young single mothers), single-person households, households with a single earner, elderly households, low-income households, disabled persons living alone, and drug addicts. In the United Kingdom, private house building has failed to meet demand for owner- ■ Belgium – demand exceeds supply in the Brussels- Capital and Wallonia regions, whereas in Flanders supply exceeds forecasted demand; ■ Finland – demand is highest in the Helsinki region, but there is an oversupply of housing in some other parts of the country where the population is declining; that 155,000 additional households will be formed each year for the foreseeable future, but new house building has fallen steadily from a peak of 350,000 annually in the late 1960s to below 140,000 at the current time. Taking account of demolitions and conversions, net additions to the housing stock are Rising numbers of households, usually associated with falling average household size, is a key driver of housing demand in all the European countries where the market is not in equilibrium. However, apart from this, it is interesting to note that the additional drivers occupied property. Furthermore, the type of housing being built – traditional semi-detached and large detached dwellings – does not reflect the decline in household sizes. In recent years, more than 1 in 3 dwellings built in the South East of England have been large, 4-bedroom homes. In the Netherlands the ■ France – demand is highest in Paris, Lille, Bordeaux, Strasbourg, Toulouse, Lyon, Montpellier, Nice and certain border areas; ■ Germany – demand is highest in Munich, Frankfurt and Cologne; nearer to 120,000 per annum – an output figure that is of demand for housing vary in different parts of severest market shortage currently concerns low-cost, ■ Ireland – demand is particularly strong in Dublin; insufficient to replace obsolete dwellings, let alone meet new demand. The Irish government’s National Development Plan 2000-2006 estimates that some additional 500,000 new dwellings would be required Europe. In Spain, there has been a marked nationwide increase in the demand for housing for use as a second home or for investment purposes. In Ireland population growth has fuelled demand, as has its single-family, owner-occupied dwellings. For every 100 dwellings of this type currently supplied, demand is estimated to be in excess of 257. As a result of the low average incomes in Bulgaria, the strongest demand is ■ Italy – demand is concentrated in urban areas; ■ Luxembourg – demand is strongest in Luxembourg City; over 10 years from 2000 to 2010 to meet the demand for housing. Were this level of output achieved it would constitute an increase of 42% in the Irish housing stock. Housing demand in Luxembourg is currently strong, and it significantly exceeds the levels of supply detailed in Section 4.2 above. Several of the countries that acceded to the EU in 2004 population structure, which is atypical in European terms because birth rates remained high until the late 1970s. This means that the Irish population contains a comparatively high proportion of individuals in their 20s and 30s, who are likely to be forming new households and seeking homes of their own. Similarly, as mentioned in Section 2, the population of Luxembourg has grown by 11.2% since 1992. In all of for system-built apartments and studio and 1 and 2- room apartments which are most affordable for buyers. In Germany demand for owner-occupied housing is particularly strong in the regions of the former German Democratic Republic, whereas, with the exception of Berlin, demand for rental housing is declining nationwide. Similarly in Greece, demand for owner-occupied housing is growing strongly while ■ The Netherlands – demand is concentrated in the provinces of Utrecht and Gelderland, and ■ the United Kingdom – the shortage of housing is greatest in the South East of England, particularly in London, but demand is low and consequently a marked oversupply of housing exists in parts of the North of England. and some of the States that are applicants for the new EU member States (except Malta and Cyprus) demand for rental housing is falling. In contrast, in a However, variations in demand for housing between membership report acute housing shortage. Latvia and the applicant countries, problems in relation to the number of countries, including Slovenia, Lithuania, areas of high and low economic growth are requires 50,000 new dwellings between 2003 and 2013 quality and location of the existing housing stock are Belgium and Ireland, demand for social rented housing particularly acute in some of the countries that joined in order to satisfy demand but projected housing an important demand driver. This is even an issue in is greater than supply. the EU in 2004 and in applicant States. In Latvia, for output during this period is only 18,000 units. In countries such as Romania, where there is no instance, housing demand is low in regions with low Poland, the deficit in the number of dwellings is significant macro-level shortage of dwellings. The In some countries these variations are related to economic activity, while in economically developed currently estimated to be over 1.5 million units – or relatively poor quality and standard of many of the specific localised factors. In Spain, housing demand is regions it exceeds availability many times over. As a 12% of the 2002 housing stock. In Lithuania, at the panel blocks built during the communist era in this particularly strong in those regions that attract tourism result of migration from rural to urban areas, housing 144 European Union Report Regular National Report on Housing Developments in European Countries 145
Section 4 Outcomes Outcomes Section 4 shortages in Lithuania are concentrated in the biggest cities, especially in Vilnius and Klaipeda regions. In the coming decades. In England this increased demand will be underpinned by continuing growth in the Only three of the governments that participated in this review reported the possibility that housing demand 4.6 Equilibrium Slovenia housing demand is also strongest in urban areas, particularly the capital Ljubljana. In Estonia, demand is strongest in the capital city Tallinn and in the Harju region which surrounds it. These areas currently account for some 72% of the total value of real estate transactions in the country, whereas in rural areas demand and house prices are very low, to the number of new households, which is expected to rise from 20,905 new household formations in 2002, to 22,519 in 2011 and to 24,000 by 2021. In Malta demand for smaller housing units, both for first-time buyers on the market as well as for households awaiting allocation of social housing, is expected to be particularly strong. The population structure of Poland would not exceed supply in the medium term. If housing output plans proposed under the terms of Slovenia’s National Housing Programme which was adopted in 2000, are realised, housing output should increase to 10,000 new dwellings annually by 2009, which would satisfy the overall demand for housing in the country. Future housing demand in Romania is As mentioned above, in the vast majority of European countries either the housing market as a whole, or specific segments of it, are in disequilibrium at the current time. This Section describes the key factors that have contributed to this situation and the policies and programmes which have been introduced to address it. extent that these areas lack a properly functioning property market. Even in Turkey, where the present is atypical in European terms and this is expected to fuel housing demand in coming years. The Polish birth difficult to predict. On the one hand, demographic projections indicate that the Romanian population will 4.6.1 Disequilibrating Factors authorised and unauthorised housing stock matches demand on a nationwide basis, there is currently a shortage of housing in the provinces of: Ardahan, Bitlis, Hakkari, Kars, and Sakarya. 4.5.3 Projected Demand In a majority of the countries examined in this review, rate was high until the early 1980s, and individuals born during that time will be reaching the usual family formation age in the near future. In Latvia housing demand between 2003 and 2013 is projected to be 50,000 units. In Lithuania the number of households is expected to grow, net migration will become positive and household incomes are also expected to expand. In order to satisfy the increase in the demand for housing shrink considerably over the next decades. However, on the other hand, average household size will probably diminish due to the ageing of the population and the change in social patterns. The demand for new housing may be increased due to the poor standard of the existing housing stock and more demand for owner-occupied housing in preference to renting. In Portugal, demand is expected to decline in the medium The various factors that have contributed to unbalanced demand and supply in national and regional housing markets in European countries are summarised in TABLE 4.6.1. This table highlights some factors that have disequilibrated housing markets in a significant number of countries across Europe and others which are particular to specific parts of Europe. demand for housing is expected to grow over the next decade but in some cases, demand is to grow at more moderate levels than has been the case in the recent past. In France, housing demand is expected to fall from 320,000 dwellings per annum between 2000 and 2004 to 290,000 dwellings per annum between 2005 and 2009. In Ireland demand for housing is expected to continue to rise, fuelled by population growth and changing patterns of household formation, but it will begin to abate after 2006, with stronger levels of reduction occurring after 2010. Housing demand in Spain is expected to grow less rapidly in the mediumterm than at present as a result of a number of factors, such as economic growth and growth in household disposable income, availability of mortgage finance and negative population change. In Finland demand for housing will reach 35,000 new housing units per created by these developments, 100,000 to 120,000 dwellings will be required over the next 10 years. In the Czech Republic, rising household incomes as a result of economic stabilisation are expected to lead to increased demand for housing in the future. Policy interventions are intended to spread economic growth evenly however they will have implications for the average incomes of different regions which in turn will accentuate regional differences in demand. In Bulgaria, a number of issues such as an economic stabilisation, increased availability of mortgage finance, growing investments in housing by foreigners and employed Bulgarian citizens, and increased demand for home ownership in preference to rented housing are also expected to affect increasing demand for housing. Similar factors are also expected to fuel term as a result of the abolition of subsidies for mortgage loans in 2002. For instance, scarcity of development land, particularly in urban areas where housing demand is generally greatest, is an issue in most parts of Europe. This includes: Finland, Ireland, Lithuania, Malta, Portugal, Romania, Slovakia, Slovenia, Spain and Turkey. Problems in relation to the efficient operation of planning, procurement and building control systems are also an issue in a number of countries, including: Estonia, Ireland, Latvia, Lithuania, Portugal, Romania and Sweden and Turkey. In addition, in three countries (the Czech Republic, Denmark and Malta), rent control is a significant impediment to investment in the private rented sector, while rising and high construction costs and lack of availability of skilled building workers is an issue in Cyprus, Ireland, Lithuania, Romania, Sweden and the United Kingdom. year in the period 2006 to 2010, rising to 36,000 dwellings per year between 2011 and 2015. The current level of housing construction is around 27,000 dwellings per annum. In the Netherlands, it is expected that the housing shortage will amount to 2.3%, as compared to 2.5% currently unless housing construction increases significantly. On the other hand, in a number of countries demand for housing is expected to increase significantly over continued growth in demand for housing in Estonia, in urban areas in particular, which is unlikely to be satisfied by the supply of new dwellings. The Turkish government’s five-year development plan for housing which covers the period 2001 to 2005 predicts that, as a result of population growth, the need for renovation and replacement of sub-standard dwellings, and the need for housing for those made homeless as a result of disasters, a total of 3,075,000 new dwellings will be required between these years. At the same time, the factors which have unbalanced housing demand and supply in the majority of Central and Eastern European States are quite distinct from those common in the other countries under examination. In Bulgaria, Hungary, Latvia, Lithuania, Romania, Slovakia and Turkey, low household incomes have impeded the supply of new housing because demand is not supported by the ability to purchase or rent. In addition, the private sector in these countries has failed to compensate for the withdrawal of the State as the principal funder of housing construction. 146 European Union Report Regular National Report on Housing Developments in European Countries 147
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REGULAR NATIONAL REPORT ON SYNTHESI
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Regular National Report on Housing
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Table of Contents Table of Contents
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Definition of Terms New Member Stat
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Section 1 Introduction and Summary
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