In practice, national housing market strategies have proven to be Gordian knots. This is because changes in these structures will have (and have) profound and dramatic effects on the population’s everyday life. Changes in the structure of the housing markets impact directly on the household economy and naturally lead to demands for simultaneous changes in the tax system for home ownership, changes in rent regulations/levels, subsidy systems, social housing forms, housing allowance or other financial incentives related to housing production and management. This is probably the reason why no country in Europe has managed to take comprehensive measures, but only piecemeal changes and adaptations related to current and national political moods. Today, proposals for changes in the national housing market strategies are guaranteed not to be a political winner in any country.
“If the European Green Deal has a soul, then it is the New European Bauhaus which has led to an explosion of creativity across our Union.
The New European Bauhaus initiative calls on all of us to imagine and build together a sustainable and inclusive future that is beautiful for our eyes, minds, and souls.
Beautiful are the places, practices, and experiences that are:
- Enrichment, inspired by art and culture, responding to needs beyond functionality.
- Sustainable, in harmony with nature, the environment, and our planet.
- Inclusive, encouraging dialogue across cultures, disciplines, genders and ages.”
Ursula Von der Leyen, President of the European Commission
29 different housing market structures
Europe’s very different national housing market strategies are counterproductive in relation to solving common European challenges related to the housing markets. This applies both in relation to quantity and quality objectives. Furthermore, the national ownership and financing structures lead to major barriers in relation to the free movement of labour. It will also be very difficult to achieve ambitious climate and sustainability goals without a greater degree of coordinated housing market structures. The consequences of this have so far been too low and variable housing production, as well as increasingly higher thresholds regarding labour mobility and resource allocation between countries. There is now a recognition in the EU bureaucracy that Europe’s climate and sustainability goals will not be possible to achieve without completely new cooperation and coordination structures related to the housing stock and construction. This recognition is now taking hold in political circles as well. An increased degree of supranationality and clear common climate goals and the use of instruments will presumably also make it easier to gain acceptance for such changes in the population. Coordinated use of instruments in the climate area will also be able to have a direct positive impact in relation to common goals for living environments, housing standards (quantity and quality), financing structures, forms of ownership and tax systems.
In total, in recent years, on average, around two million new homes have been completed per year in Europe (EU27+UK+Norway) – which corresponds to a new production of 3.8 homes per 1,000 inhabitants. The production of housing varies widely and is random between countries, apparently without any link to real needs related to population development. Behind the stable total housing production figures hides a growing backlog related to overall population development in relation to underlying demographic changes. These are challenges that have been known for many years, but which are now intensified by population changes as a consequence of the war in Ukraine.
The EU’s 27 member states + Norway and the UK today include around 520 million inhabitants. As in the rest of Europe, each of these countries has its own strategy for housing supply and very different structures in what is popularly called the housing markets. These – sometimes large – differences have made it very difficult (read: virtually impossible) to coordinate housing policy measures between the countries. The consequences of this have so far been too low and variable housing production, as well as high thresholds regarding mobility of labour and resources between countries. Going forward, it seems that Europe’s ambitious climate and sustainability goals will not be possible to achieve without a greater degree of coordinated housing market structures.
The recognition that Europe’s climate and sustainability goals will not be possible to achieve without completely new cooperation and coordination structures related to the housing stock and construction can now be read directly from a wide range of new initiatives from the EU bureaucracy.
In addition to the current energy efficiency directive (Energy Performance of Buildings – EPBD), several ambitious measures are underway from the EU, i.a. “New European Bauhaus”, which aims to initiate processes related to “enrichment”, “sustainability” and “inclusivity”, i.e. nothing less than a coordination of resources to improve housing quality and our daily lives related to housing.
On top of such supranational measures and new regulations related to both the existing housing stock and the production of new housing, we can note a continued high level of national creativity in relation to the housing market. These are processes that have shaped the national housing markets over time and led to the fact that today in Europe we have “at least” 29 (EU27+Norway+UK) very different housing market structures.
“Housing policy at European level must not be limited to helping vulnerable individuals and people in need, but must be expanded with the aim of offering affordable housing to all. In particular, policies should match family needs, promote high-quality and energy-efficient housing, encourage a social mix in buildings and urban areas, and tackle segregation. The EU currently lacks a unified housing strategy. Nevertheless, while continuing to comply with the principle of subsidiarity, EU housing policy is increasingly integrated into other European measures.”
The European Economic and Social Committee (EESC)
Seen from a Norwegian point of view.
On Norway’s part, a report from an expert committee set up by the Ministry of Finance was presented in December 2022 – with the ambitious title “A comprehensive tax system”. Chapter 11 of the report is entitled “Tax on housing and property”. Here there are probably many sensible proposals for restructuring and coordinating housing taxation. Nevertheless, it must be characterized as sensational that the report does not mention in words that the main purpose of any housing market structure is to ensure a satisfactory supply of housing in relation to the country’s needs.
From a tax perspective, it is understandable that the home (property) is perceived as an ideal basis for taxation. But when this is disconnected from the supply problem, the consequences of tax changes could be very dramatic both in the short and long term. After the report was presented in December, a heated and broad debate arose, with important contributions from both economic and housing policy circles. After a couple of months of debate, things apparently went completely quiet. Presumably, it is considered from political quarters that this debate (regardless of political sign) will be able to steal far too much attention from other current political topics. The housing tax debate will probably have a new spring when the distance to the next election is somewhat longer. Hopefully, that debate will also include issues related to short- and long-term effects on the housing supply. Presumably, it is considered from political quarters that this debate (regardless of political sign) will be able to steal far too much attention from other current political topics.
What can make the Norwegian (and national housing tax debates in general) housing tax debate extra difficult this time are the simultaneous issues related to adopted energy and climate targets. As previously mentioned, it will be necessary to upgrade a large proportion of the Norwegian (and European) housing stock at costs that will not be possible without direct public support schemes – support schemes that currently do not exist. In this context, stricter housing taxation will simply not be feasible without Norway simultaneously choosing to break with the agreements that have been adopted and signed at the European level.
The EU and Norway currently lack a unified housing strategy with a spotlight on housing supply. Unfortunately, the EU’s and Norwegian housing policy is thus increasingly integrated into other national and supranational measures. In this way, the real goal is pulverized – which for all countries is to have the highest possible housing quality measured as an available supply of the right type of housing, in the right living environment, in the right place, at the right time and – not least – at the right price.