Addressing housing affordability in Europe

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According to the McKinsey Global Institute, housing affordability is a global challenge.  Beacon sent Nick Collins over to Sweden, Germany, Denmark, the Netherlands, UK and Ireland to see how Europe is addressing the issue.

Nick found that, while there are strong parallels between Europe and New Zealand in terms of the housing challenges we face, there are marked differences in the responses. These can be summarised into six key areas.

 

Cities and states partner with the private sector to ensure affordable housing provision

Most European city or state governments have federally imposed obligations to either plan for affordable/social housing provision, or provide suitable housing. 

  • In the UK, the National Planning Policy Framework lays out the role of local planning authorities in ensuring housing supply, delivering a wide choice of high quality homes, widening opportunities for home ownership and creating sustainable, inclusive and mixed communities.
  • In the Netherlands, central government decentralised responsibility for adequate housing to local governments and housing associations; municipalities supervise housing associations which take on the actual provision and administration. 
  • In Germany, the federal government more recently (2006) devolved responsibility for housing supply to state and municipality governments; municipalities can own social housing, are responsible for zoning/making land available, and  work with private developers and federal institutions to enable developments. 
  • In Sweden, the Swedish Housing Supply Act makes each municipality responsible for housing provision at a local level.
  • Northern Ireland is the exception, where affordable/social housing provision is driven by central government via a robust Housing Strategy and housing associations.

This is behind the drive for states and/or cities to partner with private developers to provide housing.  Cities and state governments can enable land to be freed up and invest in infrastructure support - and in return, they mandate the provision of affordable housing as part of developments.  Of particular interest is that land is not sold to developers; rather, it is treated as patient capital, a type of long term investment.

 

Alternative pathways to delivering housing

Most European cities meet their statutory obligations to provide social housing through independent, not for profit organisations (housing associations or municipal housing companies/enterprises).  These organisations do not necessarily get direct capital funding grants, although they benefit from housing support, and rental income covers building maintenance.

There are also alternative mechanisms for developing affordabile housing: housing cooperatives are tenant-owned, providing rental accommodation for members; in baugruppen in Germany, residents lead design and development, saving 15-20% on developer fees.  These alternative mechanisms could be explored in the New Zealand context.

 

States and cities support alternative housing pathways

These alternatives are actively supported by states and cities by underwriting contributions, favouring alternative mechanisms when allocating government owned land, and providing support services for communities developing their own housing.  For example, in Berlin, the City-appointed facilitator, Stattbau, has facilitated 160 groups into co-housing over the last 8 years.

Self build is another alternative receiving state support in the UK and the Netherlands (for example, by identifying surplus land for self build developments).

 

Growth of non-traditional institutional investors in housing

One factor encouraging the ‘at scale’ development of housing in Europe is investment by global institutions that have not traditionally invested in the sector.  For example, in the UK, insurer and pension fund manager Legal & General has become an active investor across the housing supply chain.  How to bring this level of investment to New Zealand, from either local or global investors, is worth considering.

 

Investment in off-site manufacturing

Off-site manufacturing is gaining scale, particularly in Sweden, Germany and the UK.  Large investors in the UK are developing sophisticated and large scale off-site factories delivering a mix of traditional construction and pre-assembled components alongside modular housing solutions.  New Zealand’s fledgling off-site manufacturing would benefit from greater investment but needs a high level of certainty for investors.

 

Renting is well supported

The final difference notable in Europe is the greater acceptability and provision of renting.  While this is partly a cultural difference, rental accommodation (both social and affordable) is more widely provided, better quality, and tenants’ rights/rents more highly regulated.

 


  • 29-Nov-2016 (Presentation )

    Affordable Housing At Scale (PDF 4.5MB)

    Nick Collins

    This presentation provides an overview of learnings from the scoping tour in 2016.  A future study tour is planned (dates as yet unconfirmed) to explore these learnings further.


  • 30-Jul-2016 (Report )

    Delivering Affordable Housing At Scale: Lessons from Europe (PDF 3.2MB)

    Nick Collins

    This report is the outcome of a three week scoping tour of Europe and the UK, which looked at how these countries are addressing challenges of housing affordability.  It analyses where the challenges are similar,  how shortages of affordable housing are being addressed differently, and what New Zealand can learn from these alternative approaches.


  • 01-Jul-2016 (Publication )

    Background: Housing in UK (PDF 166KB)

    Andrea Blackmore

    Background for 2017 study tour looking at addressing housing affordability in Europe


  • 01-Jul-2016 (Publication )

    Background: Housing in Germany (PDF 102KB)

    Andrea Blackmore

    Background for 2017 study tour looking at addressing housing affordability in Europe


  • 01-Jul-2016 (Publication )

    Background: Housing in Sweden (PDF 111KB)

    Andrea Blackmore

    Background for 2017 study tour looking at addressing housing affordability in Europe


  • 01-Jul-2016 (Publication )

    Background: International Building Exhibition IBA Hamburg (PDF 411KB)

    Andrea Blackmore

    Background for 2017 study tour looking at addressing housing affordability in Europe


  • 01-Jul-2016 (Publication )

    Background: Alternative housing delivery - Housing associations (PDF 51KB)

    Andrea Blackmore

    Background for the 2017 study tour looking at addressing housing affordability in Europe


  • 01-Jul-2016 (Publication )

    Background: Alternative housing delivery - Cooperatives (PDF 627KB)

    Andrea Blackmore

    Background for the 2017 study tour looking at addressing housing affordability in Europe


  • 01-Jul-2016 (Publication )

    Background: Alternative housing delivery - Baugruppen (PDF 445KB)

    Andrea Blackmore

    Background for the 2017 study tour looking at addressing housing affordability in Europe

HafenCity, Hamburg

 


 

Baugruppen