housing developments in european countries - Department of ...

Section 4
Outcomes
Outcomes Section 4
Section 4.6.1 above highlighted the lack of serviced
building land as one of the most important
disequilibrating factors in the Slovakian housing
market. In order to address this problem, since 2001
the operational area boundaries of local authorities
then made available to the housing market. In
addition, the Housing Development Administration
also contributes to increasing housing construction and
finance by supporting the production of housing units
through providing loans to housing co-operatives, local
4.7 Costs
This Section examines the various issues that impact
on the affordability of housing including: housing
construction costs, mortgage interest rates and lending
Luxembourg, construction costs per m 2 for apartments
are lower than for single-family houses. This may be
related to the more widespread use of industrial
building methods in apartment construction.
where all building land has been used up have been
extended. Since real demand for housing is limited by
the purchasing power of households and the supply of
housing is limited by the availability of finance to
developers, the government has recently initiated a
number of reforms to the aspects of economic policy
relevant to the accumulation of savings and the
granting of mortgage loans. In addition loans are now
available from the State Housing Development Fund
authorities and key target groups who are in particular
need.
The key policy Statement relevant to equilibrating the
housing market which has been produced by the UK
government in recent years is: Sustainable
Communities: Building for the Future. This Statement,
published in 2003, aims to stabilise housing demand
and supply in England by increasing the supply of high
volumes and trends in house prices and rents.
4.7.1 Construction Costs
Collating comprehensive data on housing construction
costs across all European countries raises a number of
difficulties. In several countries, data of this type are
not collected, in others construction cost information is
only available for State-subsidised housing, while the
Where disaggregated data were available in relation to
the construction costs of private and social housing,
dwellings in the latter category cost less to build. This
difference is the result of limits in the funding available
for constructing social housing which usually results in
ceilings on acceptable tender prices or some other cost
control mechanism.
4.7.2 Mortgages
for the construction of dwellings for rent and for the
quality and affordable housing in areas of high
methodology used to calculate construction costs also
servicing of land for development.
demand, addressing the shortage of housing in London
varies internationally. The information that is available
Details of mortgage interest rate trends in European
and the South East of England by providing for major
on housing construction costs in European countries is
countries in recent years are provided in TABLE 4.7.2.
The Turkish government’s five-year development plan,
growth in new housing construction in the 4 growth
summarised in TABLE 4.7.1.
Variations in the banking systems and arrangements
covering the period 2001 to 2005, involves a number
areas and the regeneration of declining communities.
for monitoring of lending by governments mean that
of proposals intended to expedite the supply of
In addition, measures also include addressing housing
In several countries, including Belgium, the
interest rate data for all of these countries may not be
housing in this country. The plan includes the
market decline, low demand and housing
Netherlands, Finland and Sweden, annual house
strictly comparable. Nevertheless, some significant
following elements – the development of alternative
abandonment in parts of the English Midlands and
construction inflation has increased at a much stronger
trends in mortgage interest rates in the countries under
financing to encourage new house building and home
North, improving the standard of social housing,
rate in recent years than general consumer price
review can be deduced from this table.
owners and to address the housing needs of low-
enhancing the efficiency of the planning system,
inflation. Sweden provides a particularly acute example
income groups, the formulation of plans to improve
decentralising housing policy and planning by
of this phenomenon. Building costs for new multi-
For instance, in the vast majority of European
land supply and the quality of residential developments
empowering local and regional government and the
family housing in this country increased by almost
countries the average mortgage interest rate has
in urban areas, the reorientation of public resources to
protection of the countryside and improvement of local
70% between 1995 and 2002 while the consumer
reduced substantially in recent years, to the extent that
ensure more development land is serviced and the
environments. This policy Statement is supported by
price index only increased by 7% over the same
in many cases it now stands at an historic low. In
introduction of measures to prevent squatters and
substantial resources of STG£22 billion over 3 years.
period. However, Ireland and Germany are an
Luxembourg interest rates have fallen from 7% in
illegal housing. Additional measures include the
exception to this trend. Building costs in Germany
1994 to 3.85% in 2003, while in some other countries
control of construction materials to ensure high
have declined in recent years, while in Ireland their
this fall has been even more dramatic. For example, in
building standards, reforms to educational systems to
rate of increase was significantly below the general rate
Ireland the interest rate on a standard variable
ensure the availability of qualified construction
of inflation.
mortgage stood at 14% in 1994, whereas at the end of
personnel and the introduction of measures to improve
2003, rates ranged from 3.3% to 3.6%. Similarly,
the quality of the built environment and to protect the
In most European countries there are significant
between 1992 and 2003 interest rates in Portugal fell
natural environment and historic structures.
regional differences in house construction prices, with
from 18% to 4.4%. Romania has not enjoyed such a
prices in areas of expanding population and economic
marked fall in interest rates as most other European
In order to help achieve these objectives the Turkish
growth (which are usually urban areas) rising at a
countries. Interest rates in this country remain
Housing Development Administration plans to build
much faster rate than in declining areas (usually rural
comparatively high, and more prone to fluctuation
100,000 houses for low and moderate income
areas). Countries in the category include: Cyprus, the
than is the norm in the rest of Europe.
households by the end of 2004. Furthermore, in order
Czech Republic, Finland, Germany and Sweden.
to address the lack of availability of mortgages and
Regional price differences are particularly marked in
It is interesting to note that the timing of the period of
finance for housing, highlighted in Section 4.6.1 above,
Germany. Building costs in the federal States within the
falling interest rates varies around Europe. In most of
the Housing Development Administration has been
former German Democratic Republic (GDR) are
the countries which were EU members prior to 2002
developing alternative financing policies including
substantially lower than in the rest of the country.
interest rates started to fall in the early or mid 1990s.
buying mortgages from financial institutions which are
In many European countries, including Cyprus and
As was mentioned in Section 4.5 above, in these
152 European Union Report
Regular National Report on Housing Developments in European Countries
153