Hands up those who knew that there was a housing crisis in the European Union? By which I mean, by the way, almost all the countries within it. I’ve only just discovered this myself, so I don’t blame readers of this esteemed journal.
Yes, I have been trying to explain for a while that those who think only New South Wales has a housing crisis really need to get out more. First, to realise that there is a housing crisis in every state in Australia, but then to go further afield to note that something similar has been going on in Britain, Canada and New Zealand and indeed across the Anglosphere, including many if not most states in the US.
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And I’ve been calling that out because of our parochialism in assuming that the crisis is really one confined to our own nation. We then double down on the introspection by blaming something going on within our own polity.
Interestingly, both Australian and UK politicians are currently blaming their own planning systems for what is deemed to be their respective housing supply problems, when, as I have repeatedly pointed out, the one thing these countries don’t share is a planning system – Australia has at least eight diverse systems, not counting council-based variants.
What they do share is a private sector having viability problems way beyond “planning barriers” – skills shortages, exploding costs of materials, land and borrowing, together with consumer uncertainty post-COVID, and governments refusing to return to being direct builders of public housing.
And of course, countries across the Anglosphere have also shared cheap money/low interest rate policies promoted by their Reserve Banks since the 2008 global financial crisis, which have fuelled an over-financialisation of residential property and raised home prices.
The EU gets the problem, but also a better understanding of it
What I had not fully realised was the extent to which such problems beset the EU. What’s made me sit up and take notice about this is an initiative of the European Parliament, which in late 2024 set up a Special Committee on the Housing Crisis in the European Union.
Why? Because “the European Union is facing a housing crisis, with people of all ages across different income groups struggling with high prices and scarcity of affordable homes”; because “unaffordable housing is a matter of great concern for many Union citizens and prevents them, particularly young people, from starting an independent life”; and because “that crisis affects people in all member states and can have a negative impact on their health, well-being and living conditions”.
I learn from the committee’s excellent documents and research that average house prices in the EU went up in the nine years to 2025 by almost 60 per cent, with countries such as the Netherlands going up almost 100 per cent, Ireland by 83 per cent and Portugal by 125 per cent
Even in Germany, with its economically and demographically challenged East and much vaunted “low barrier” planning system, housing costs went up almost 49 per cent.
By contrast with the UK and indeed the Australian governments, the European Parliament’s initiative is doing proper research.
Australia and the UK, by contrast, have both deemed there to be a housing crisis without studying it in any depth, nor analysing the failures of the home-building industry itself. Both have announced housing delivery targets that are neither firmly based in evidence nor turning out to be deliverable, and are anyway unlikely to have any significant impact on reducing housing prices or on meeting the need for affordable housing.
Moreover, the EU parliament’s evidence-taking sessions are transparent and open to the public. Its remit is broad, which I also think is correct.
It will: map current housing needs across territories and population groups, “particularly low and middle income groups, and assess the impact of scarcity of housing on inequalities, affordability, demography, poverty and social exclusion, including using existing gender-disaggregated data”.
It will also “analyse the existing relevant Union, national, regional, and local housing policies with a focus on the availability of targeted instruments for social, sustainable and affordable housing”.
Crucially, it will look at “the impact of housing speculation and its economic consequences, as well as to propose follow-up actions” and “assess the effectiveness of public and private Union and national resources, including existing Union funds dedicated to decent, sustainable and affordable housing and to the eradication of homelessness and to make recommendations, where relevant”.
Finally, it will “assess potential barriers affecting the construction sector and their impact on the housing crisis”.
It’s a comprehensive list – not narrowly focused on “planning barriers” as purported bottlenecks to planning supply.
I add I have never doubted in these pages or anywhere else that the transaction costs of doing business with the state in terms of burdensome bureaucracy, procurement and planning, should be reduced.
The public sector should always look to be efficient and reduce burdens and costs on businesses, were safe and feasible. But I do share the European Parliament’s perspective that planning issues are simply not core to the shared housing crisis.
It is necessary but not sufficient to improve planning processes, given how much more emphasis we should be placing on what housing guru Professor Josh Ryan-Collins of University College London calls the housing-finance feedback loop or cycle.
That is to say, the shift we have seen in most national economies since the 80s, away from banks investing mostly in business, to banks investing mostly in residential property, has been at the heart of the asset price inflation we have seen with housing, not just supply issues.
And insofar as there has been a supply issue, the lack has been less in terms of private for sale supply than in non-market or public housing. In the UK from 1950 to 1975, 40-45 per cent of all housing supply was in the form of public housing.
That is to say, around 170,000 homes a year, on average, of the nearly 400,000 homes they used to build were council houses.
By the way, when they stopped building public housing in the UK in the mid 70s, the private sector did not up its supply at all. It has built around 200,00 to 230,000 homes from the mid-70s to date, even though the UK population has grown radically since then.
Despite all the noise around housing supply, the UK is on target to build not a brick more than it tended to do 50 years ago. The idea that this “supply failure” is a consequence solely of public sector “planning barriers” is frankly silly – and not just in the UK but here too.
Oh, and to confirm that the European parliament – don’t tell Nigel Farage! – has a better grasp on the key issues around the shared housing crisis than many in the UK debate, the title of the Special Housing Committee’s 3 July public hearing was “Financialisation in the housing market: effects and policy responses”.
Giving evidence? One Josh Ryan-Collins. Is it too much to ask of Australian governments, state and federal, to consider having such a hearing on precisely this issue here?
