Affordable Land and Housing Europe and North America

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EUROPE AND NORTHAMERICA

AFFORDABLELANDAND HOUSINGIN


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Copyright United Nations Human Settlements Programme(UN-HABIA), 2011

An electronic version o this publication is available or download rom the UN-HABIA web-site athttp://www.unhabitat.org

A ght vd

United Nations Human Settlements Programme (UN-HABIA)P.O. Box 30030, GPO Nairobi 00100, Kenyael: +254 20 762 3120Fax: +254 20 762 3477

Web: www.unhabitat.org

DisclAimer

Te designations employed and the presentation o the material in this report do not imply the expressiono any opinion whatsoever on the part o the United Nations Secretariat concerning the legal status oany country, territory, city or area or o its authorities, or concerning the delimitation o its rontiers orboundaries.

Reerence to names o frms and commercial products and processes does not imply their endorsement bythe United Nations, and a ailure to mention a particular frm, commercial product or process is not a signo disapproval.

Excerpts rom the text may be reproduced without authorization, on condition that the source is indicated.

HS Number: HS/074/11EISBN Number (Series): 978-92-1-131938-5ISBN Number (Volume): 978-92-1-132368-9

Design and Layout: Gideon Mureithi/UNON

Printing: UNON, Publishing Services Section, Nairobi,ISO 14001:2004-certifed.


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AFFORDABLE LANDAND HOUSING IN EUROPEAND NORTH AMERICA

Volume 4


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ii

Volume 1: Latin America and the Caribbean

Volume 2: Asia

Volume 3: Africa

Volume 4: Europe and North America

ADEQUATE HOUSING SERIES

In the vast majority o countries access to aordable land and housing is a critical contemporarychallenge. While in dierent countries and regions the specicities o the challenge vary, theuniversal truism is that it is becoming increasing dicult or the vast majority o urban residents toobtain and retain adequate and aordable land and housing.

Te rst our volumes in the Adequate Housing Series canvas the state o aordable land andhousing in our regions acing major aordability diculties: Latin America and the Caribbean,

Asia, Arica, and Europe and North America (member countries o the United Nations EconomicCommission or Europe).

Each volume rstly explores the major trends in housing conditions, availability, quality andtenure modalities. Following this, each volume analyses housing policy responses to addressgrowing aordability problems and the improvement o substandard housing conditions. Lastly,key recommendations or local, national and international policy initiatives that can increase theprovision o aordable housing in the respective regions is provided.

Tis agship series is coordinated and produced by the Housing Policy Section o UN-HABIAand to date the ollowing volumes have been published:

ACKNOWLEDGEMENTS

Principal Authors: Sasha senkova and Matthew French

eam Leader: Claudio Acioly Jr.

Contributors: Claudio Acioly Jr.,Mohamed El Siou, Christophe Lalande, Channe Oguzhan,

Hugo Priemus, Koen Steemers and the University o Cambridge, Nigel Browneand the Institute or Housing and Urban Development Studies (IHS).

Programme Assistant: Helen Musoke

English Editors: Roman Rollnik and Matthew French


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iiiAFFORDABLE LAND AND HOUSING IN EUROPE AND NORTH AMERICA

FOREWORD

Te rst our volumes in the Adequate Housingseries respond to the urgent need or a globalassessment o the state o land and housing.While countless studies, research projects, andreports have been undertaken on individualhousing needs, projects, and programmes,no contemporary studies have compared andcontrasted housing conditions, policies, andapproaches on a regional or global scale.

Tis series lls this gap. Te our volumes ocuson the land and housing situation in our regions

acing considerable challenges and aordabilityproblems: Latin America and the Caribbean,Asia, Arica, and Europe and North America.Tey present a comparative documentation othe historical trajectory, major contemporarytrends, and best practices in land and housingprovision in each region.

Although the size and overall characteristics othe housing sector does vary markedly acrossthese regions, and indeed their countries,

common to all is the act that obtaining andretaining housing that is adequate and aordableis a serious problem or a large proportion o thepopulation.

Unortunately housing aordability remainsa challenge and it is worsening due to, amongother actors, the economic eects o the globalnancial crisis and the increasing severity odisasters and conicts, which both place anadditional strain on already stretched land and

housing resources. Tis series and its messagesand recommendations are thereore timely.

Tese regional studies represent a signicantstep orward in investigating the state o theglobal housing challenge. A detailed examinationand comparison o, as well as critical reectionon access to housing at the local, national andregional levels is the rst and important steptowards designing policies to improve access to

aordable housing opportunities and to bringsolutions to scale. Tis will help in preventingcity expansion on the basis o inormal landdevelopment and inormal housing supply. Teour volumes represent a signicant body oresearch, documentation, and critical review thatI believe will be o value to those involved in thehousing sector.

Dr. Joan Clos

Under-Secretary-General o the United Nationsand Executive Director, UN-HABIA


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iv TABLE OF CONTENTS

TABLE OF CONTENTS

EXECUTIVE SUMMARY vi

KEY MESSAGES vii

ABBREVIATIONS AND GLOSSARY xiLIST OF FIGURES xii

LIST OF TABLES xiv

LIST OF BOXES xiv

1 INTRODUCTION - AFFORDABLE LAND AND HOUSING IN THE REGIONALCONTEXT 3

1.1 EUROPEAN AND NORTH AMERICAN COUNTRIES: DISPARITY

AND SIMILARITY 5

1.2 A BRIEF HISTORICAL SNAPSHOT OF HOUSING POLICY ANDPRACTICE TRENDS SINCE 1945 8

1.3 HOUSING AFFORDABILITY: ITS COMPONENTS AND MEASURES 12

1.4 STRUCTURE AND CONTENT OF THE VOLUME 14

2 THE STATE OF AFFORDABLE LAND AND HOUSING 19

2.1 QUANTITY, QUALITY, AND DISTRIBUTION OF EXISTING HOUSING STOCK 20

2.1.1 AVAILABILITY OF HOUSING 20

2.1.2 HOUSING DEFICIT AND SURPLUS 202.1.3 HOUSING QUALITY 22

2.2 AFFORDABILITY 27

2.2.1 HOUSING COSTS AND EXPENDITURE 29

2.2.2 HOUSE PRICE DYNAMICS 30

2.3 TENURE MODALITIES 31

2.4 SUBSTANDARD HOUSING AND INFORMAL SETTLEMENTS 38

3 ADDRESSING THE CHALLENGE: AFFORDABLE LAND AND HOUSING

DELIVERY TRENDS AND PATTERNS 45

3.1 NEW HOUSING CONSTRUCTION 46

3.2 FINANCING MECHANISMS, SUBSIDY REGIMES AND AFFORDABILITYCONSTRAINTS 47

3.3 HOUSING DISPARITIES: HOMELESSNESS, GENDER INEQUITY, REFUGEES ANDIDPS 51

3.4 PROVISION OF SOCIAL HOUSING 56

3.5 LAND SHORTAGES FOR AFFORDABLE HOUSING 58


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vAFFORDABLE LAND AND HOUSING IN EUROPE AND NORTH AMERICA

3.6 REHABILITATION AND MANAGEMENT OF PRIVATISED MULTI-HOUSEHOLDHOUSING IN EASTERN EUROPE 62

3.7 PROVISION OF AFFORDABLE HOUSING THROUGH URBAN REGENERATION 65

4 NOTABLE TRENDS, RECOMMENDATIONS AND CONCLUSIONS 71

4.1 HOUSING SYSTEMS AND HOUSING CONDITIONS 72

4.2 MAJOR CHALLENGES AND HOUSING POLICY RESPONSES 73

4.3 RECOMMENDATIONS 74

4.4 CONCLUSION 77

5 REFERENCES 81


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vi EXECUTIVE SUMMARY

EXECUTIVESUMMARY

Compared with the regions o Asia, Arica,

and Latin America and the Caribbean (LAC),countries in Europe and North America presentdistinctive challenges or aordable land andhousing provision. Many European and NorthAmerican countries have a long history andconsiderable experience o aordable socialhousing provision. Land and housing nancemechanisms are relatively well developed. Manyo these countries are distinctly urban andurbanization rates are some o the lowest in theworld. Population growth rates have peaked and

most cities and countries are expected to havelow growth in the coming decades. In manycountries there is no sizeable housing decit perse and the proportion o inormal, un-servicedslums is small, i not zero in some European andNorth American countries.

Aordable land and housing problems in Europeand North America stem rom dimensions oaordability that are less prevalent in Aricaand Asia. Rising socio-economic inequalities

are gentriying and dividing cites and makinghousing increasingly unaordable or low- andmiddle-income households. A near unanimousbelie in homeownership has marginalised rentalhousing, and as a result drastically reduced rentalhousing stock, which is a vital tenure option ormany households.

Governments in these countries have largelyretreated rom providing social housing inavour o enabling the market, yet the market

has not provided land and housing that isaordable to low-income households. Terehas been a general shit rom property subsidiesto subject subsidies. Te housing stock inmost Eastern European countries is comprisedo low-cost multi-storied apartment blocks,built between the late-1950s and early-1980s,which are extensively deteriorated and poorlymanaged. While households have ownershipo such units, many households cannot aordthe ongoing service and maintenance expenses.

Let unaddressed these dimensions o housing

aordability pose a serious problem or Europeanand North American countries.

Tis report thereore provides an overview oprogress achieved in the provision o aordablehousing in the countries that comprise the UnitedNations Economic Commission or Europe(UNECE). Given the immense diversity oresponses across these 56 countries, the emphasisis on practices that are conducive to the provisiono aordable land and housing.

Te report has three principal objectives. Firstly,it explores major regional trends in housingconditions with an emphasis on availability,quality, and tenure choice. Secondly, it analyseshousing policy responses that address majorchallenges such as growing aordability problems,access to social housing and improvement osubstandard housing conditions. Tirdly, thereport provides recommendations or local,national and international policy initiatives that

could contribute to the provision o aordablehousing in the region.


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viiAFFORDABLE LAND AND HOUSING IN EUROPE AND NORTH AMERICA

KEY MESSAGES

Compared withAsia, Arica, andLatin America and

the Caribbean,European and NorthAmerican countrieshave distinctiveland and housingchallenges

Compared with those in Asia, Arica, and Latin America and theCaribbean, the housing sectors in European and North Americancountries unction relatively well and many European and North

American countries have a considerable experience o aordablesocial housing. Urbanization and population growth will remainrelatively low in the coming decades placing only moderatedemand on new land and housing provision. In most Europeanand North American countries there is no sizeable housing decitper se and the proportion o inormal un-serviced slums is verylow.

Nevertheless, rising socio-economic inequalities are gentriyingand dividing European and North American cites and makingadequate housing increasingly unaordable or low- and middle-income households. A near unanimous belie in homeownershiphas drastically reduced rental housing stock which is a vital tenureoption or many households. Many households in Eastern Europelive in deteriorated and poorly managed multi-storied apartmentblocks and cannot aord the ongoing service and maintenanceexpenses. Governments in European and North Americancountries have largely retreated rom providing social housing inavour o enabling the market, yet the market has not providedland and housing that is aordable to low-income households.

Land and housingaordability

remains the astestgrowing and mostpervasive housingsector challenge inEuropean and NorthAmerican countries

Housing costs have increased with signicant implications oraccess to adequate and aordable housing, particularly or

vulnerable groups. For instance, in our countriesBelgium,Spain, Portugal and Greecea quarter o the households havesignicant nancial diculties due to housing costs; in Italy thisshare is 42 per cent. While the data are limited, it appears thatcountries with higher homeownership rates and limited tenurechoice tend to have a higher share o households experiencingaordability problems. Furthermore, the situation appears to bemore problematic in urban areas where higher prices or housingand concentration o poverty create cumulative disadvantages.

Homelessnessacross European

and North Americancountries is a seriouschallenge and a signo major ailure ogovernments toensure aordablehousing or all

The current estimate o the homeless population in Europe isclose to 600,000 with more than 60,000 people sleeping rough

and another 400,000 in homeless shelters. Asylum seekers areanother disadvantaged group who account or over 105,000in temporary shelters. Although the evidence or Central andEastern Europe (CEE) countries suggests that homelessness isless signicant in quantitative terms, several countries appear tohave a growing number o homeless people and rising demandor overnight shelters, or example Poland and Hungary. In theUnited States, in 2006 more than 750,000 people were reportedto be homeless. In the majority o European and North Americancountries, internal displacement continues to be a major problemdirectly related to housing. In the Balkans, the Caucasus, Turkeyand Cyprus the number o internally displaced persons (IDPs)

stands at 2.8 million. Serbia and Montenegro still host thelargest number o reugees and IDPs in Europe, most o themliving in substandard or inormal housing.


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viii

The availability andquality o housingis relatively high,although there aresignicant intra-

country disparities

Housing conditions in most European and North Americancountries have improved in the last decade. The general ratioo dwellings per thousand inhabitantsa crude indicator othe adequacy o housing provisionvaries, with Finland andFrance having the highest number with over 500 units per 1,000

residents. Transition countries in Eastern Europe have slightlylower levels with Albania (254/1000) and Poland (314/1000)having the lowest. Housing shortages across most countries inthe region are oten associated with particular housing types,locations and qualities rather than with the absolute shortageo housing in general; second homes and vacation homes play alarger role in European and North American countries than otherregions. In some countries, particularly in CEE there is a housingsurplus, or example ranging rom 786,000 units in Romania to58,000 in Albania.

Access to water and

adequate sanitationin Europe and NorthAmerica is one othe highest in theworld, althoughprovision in manyEastern Europeancountries isconsiderably lower

Access to water and adequate sanitation in Europe and North

America is one o the highest in the world standing at 94 per centon average or water and 93 per cent or sewer. Correspondingly,the share o housing serviced with piped water and sewer isreportedly much higher than in other global regions. However,the situation with Commonwealth o Independent States (CIS)countries is particularly problematic. For instance, only one-thirdo the housing stock in Moldova and Uzbekistan is served bypotable water and only a limited share o the housing stock hasbath/showeror instance Uzbekistan (13 per cent), Bosniaand Herzegovina (22 per cent) and Kyrgyzstan (24 per cent).Although urban areas reportedly have higher levels o service,close to 3 million people in European cities lack access to piped

water and 8 million to sewer. Furthermore, in countries intransition, high connection rates do not necessarily mean goodquality o services.

Approximatelyten per cent o thepopulation lives inslums and inormalsettlements. Inmany Eastern andTransition countries

this percentageis higher withinormal settlementsconstituting a majorhousing problem

Estimates by UN-HABITAT indicate that about 10 per cent othe urban population lives in slum conditions without access tobasic services and/or in overcrowded dwellings. In many Easterncountries the proportion o urban population living in slums isconsiderable, or example in Kazakhstan and neighbouringcountries more than hal o the urban population lives in slums.Elsewhere these rates are 30 per cent or Moldova and 19per cent in Romania, Bosnia and Herzegovina, Croatiaand Macedonia. Inormal settlements have grown rapidly,particularly in the peri-urban areas o Albania, Serbia, Georgiaand Azerbaijan which have become home to millions o newresidents.

KEY MESSAGES


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ixAFFORDABLE LAND AND HOUSING IN EUROPE AND NORTH AMERICA

A near unanimousbelie inhomeownershiphas marginalisedrental housing and

as a result the rentalhousing stock hasbeen drasticallyreduced.

Homeownership has grown steadily in most European and NorthAmerican countries, particularly in those in transition. In mosto the CEE and CIS countries, owner occupation exceeds 90 percent, which is well above the 65 per cent average in WesternEurope. In act, some o the poorest countries in the region have

the highest rates o homeownership. Analysis o house pricedynamics indicates that access to owner occupation has becomemore expensive, even i it might lead to signicant nancialbenets over the long term. Tenure choices are much broaderin Finland, Seden, Austria and Denmark due to a balancedtenure structure oering a ladder o opportunities rangingrom social to private renting to homeownership. In contrast,rental housing options are severely curtailed in several Europeancountries, or instance Spain, Greece and Italy.

The quality, energy-eciency and

management ohigh-rise multi-household housingin Eastern Europeancountries requiresurgent attention

The management and rehabilitation o high-rise multi-householdhousing is potentially one o the largest problems acing

municipalities in Eastern European countries in transition. Therapid and widespread privatisation since 1989 was not supportedby adequate post-sale communal management and maintenanceprocedures. Consequently, buildings have signicantlydeteriorated and the ailure to carry out repairs will result inmassive structural problems in more than 40 per cent o theurban housing stock. Recently, most countries have introducedlaws to regulate the operation o homeowners associations, butthe implementation has been very slow and inadequate. Themanagement o privatised multi-household housing aces threemajor challenges: organisational, social and nancial. These needto be systematically addressed alongside eorts to improve the

operational energy eciency o this housing typology, which canbenet occupant health, reduce national energy demand andoccupant housing-related expenditure.

While in themajority oEuropean and NorthAmerican countriesland is available,there is a shortageo obtainable and

reasonably pricedland or aordablehousing

The irreversible trend o urbanization has aected housingaordability through placing signicant pressure on landavailability and prices. Land or new aordable housingconstruction is becoming increasingly dicult to obtain. Land orhousing is mostly provided through the market with a variety olong-term urban planning strategies in place to ensure land supplyor new housing. Many regions, however, especially high growthregions, need coordinated planning by all levels o governmentin cooperation with civil society and commercial interests torespond to a deepening shortage o land or aordable housing.A number o regional and local governments have experimentedwith density bonusing, inclusionary zoning, land trusts and landlease arrangements to increase the availability o land supply oraordable housing.


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x KEY MESSAGES

Subsidy regimeseither do notbenet low-incomehouseholds or areinadequate in scale

to meet demand

Under subsidy regimes, subsidies ocus on owner-occupation.Mortgage interest tax relie exists in Ireland, the Netherlands,the United States (US), the United Kingdom and Spain.France oers subsidies on savings schemes or many newly-builtand renovated properties and provides a quarter o a million zero-

interest rate mortgages annually. Housing subsidies and tax breaksare common in Austria, Germany, Russia, Croatia, the CzechRepublic, Hungary and Poland. The new subsidy schemesin CEE have been criticised or being particularly inecient intargeting households in need and in supporting the most afuenthousing consumers. Meanwhile, demand-based subsidies to low-income renters have ailed to keep pace with the rising housingcosts. In most transition countries, however, such assistance isnon-existent and where it has been launched it is inadequate, orexample the Czech Republic, Poland, Romania, Estonia andLatvia. There is a need to reduce scal support (which mainlyreach high-income households, stimulate over-consumption and

push prices up) and increase the adoption o income-relatedhousing allowances.

There is a limitedprovision o socialhousing andalthough housingis increasinglyunaordable,rates o new socialhousing provision in

most are Europeanand North Americancountries are notincreasing or areinsucient to meetdemand

While aordability constraints are growing, less social housingis being provided or low-income households. In Canada andthe United States a handul o local governments have had thepolitical will to overcome some o the barriers to the developmento aordable housing. The prospects, however, or a meaningulreduction in the number o households with growing aordabilityproblems are dismal. In Western Europe, the data suggest thatin countries where the sector is signicant, there is a loosecommitment to maintain adequate supply. Austria (30 per

cent), Denmark (21 per cent) and Seden (16 per cent) havethe highest rates o new social housing production, ollowedby Finland, the UK and the Netherlands with rates in therange o 12 per cent. Several transition countries (Poland, theCzech Republic and Slovakia) have initiated new social housingprograms in recognition o their importance or many groups insociety.

In many WesternEuropean andNorth American

cities the provisiono aordablehousing is beingaccomplished aspart o ambitiousurban regenerationprojects

A number o countries in the region are addressing the provisiono aordable and adequate housing through area-based urbanrenewal and regeneration programs. Local governments, workingin partnership with non-prot housing providers and communitygroups, have experimented with inner city regeneration,browneld, and waterront redevelopment schemes. Thesearch or eective strategies or urban regeneration to createa social mix, increase the supply o aordable housing andacilitate investment and improvement o existing inrastructurehas promoted new models and a new repertoire o planninginstruments to encourage with social inclusion.


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xiAFFORDABLE LAND AND HOUSING IN EUROPE AND NORTH AMERICA

ACRONYMS

CAD Canadian Dollar

CEB Council o Europe BankCEE Central and Eastern Europe

CIS Commonwealth o Independent States

CMHC Canadian Housing and Mortgage Corporation

ECE Eastern and Central Europe

EU European Union

GDP Gross Domestic Product

IDP Internally/Internationally Displaced Person

IFC International Finance Corporation

JCHS Joint Center or Housing Studies o Harvard UniversityJESSICA Joint European Support or Sustainable Investment in City Areas

LAC Latin America and the Caribbean

MoIIR Ministry o Inrastructure o the Italian Republic and Federcasa

RICS Royal Institute o Chartered Surveyors (UK)

SEE South-Eastern Europe

UK United Kingdom

UN United Nations

UNECE United Nations Economic Commission or Europe

UN-HABITAT United Nations Human Settlements Programme

USA United States o America

USD United Stated Dollar

ZhEKs Housing and Communal Services Department, Azerbaijan


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xii ACRONYMS

LIST OF FIGURES

Figure 1: The housing landscape o Istanbul, Turkey 3

Figure 2: Map o European and North American countries (UNECE countries)

included in this volume 5

Figure 3: Regional percentage o the population living in urban areas

and urbanization growth projections or 2010-2015 5

Figure 4: The dense historic urban orm o Florence, Italy 7

Figure 5: Derelict unused accommodation in Dublin, Ireland 10

Figure 6: Basic components o housing aordability 11

Figure 7: Multi-storied housing dominates the housing stock in Malta 17

Figure 8: Apartments in Marseille, France 19

Figure 9: A housing block in Warsaw, Poland 21Figure 10: Housing vacancy rates in selected European and North American countries 22

Figure 11: Second homes and tourism houses, which are not used or

permanent habitation, are a very important element o the

European housing markets, or example in Paros, Greece 25

Figure 12: Dwellings serviced by water and sewer in select countries in 2002 25Figure 13: Public social housing in Minsk, Belarus 26

Figure 14: Deteriorated multi-household housing in Bulgaria 26

Figure 15: Housing-related expenditure in select European and

North American countries in 2004 27

Figure 16: Households experiencing nancial diculties in select countries

due to housing costs 28

Figure 17: New housing construction in the United States 28

Figure 18: Rent infation in Europe and North America 31

Figure 19: Home ownership trends in European and North American countries

in 2004 32

Figure 20: Brussels, Beligum, a city with a range o housing tenure options 33

Figure 21: Occupant additions and modications to multi-household housing

in Tajikistan 37

Figure 22: Renovation and extension o housing in Berlin, Germany 40

Figure 23: The regular yet incrementally-developed orm o residential areas in

Athens, Greece 42

Figure 24: Partly-reurbished panel housing in Czech Republic 43

Figure 25: New housing development in Tajikistan 45

Figure 26: Rates o new dwelling construction (per 1000 people) in

South-Eastern Europe 47

Figure 27: New housing units in Washington D.C, 2009 48


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xiiiAFFORDABLE LAND AND HOUSING IN EUROPE AND NORTH AMERICA

Figure 28: New housing schemes in Minsk, Belarus 49

Figure 29: Mortgage lending as a share o GDP in selected European and NorthAmerican countries, 2009 51

Figure 30: Inward and outward remittance fows in developing countries

according to region, 2007 52

Figure 31: Reugees, displaced people, and lower-income groups are all too otenorced into homelessness and street-sleeping due to the unaordabilityo urban housing, which is not acceptable or civil society - or examplethe social movement 'les Enants de Don Quichotte' in Canal SaintMartin, Paris 54

Figure 32: Social housing: Existing stock and tenant support, 2004 57

Figure 33: Existing social housing stock and rates o new construction in selectedEuropean and North American countries, 2004 60

Figure 34: Terrace housing in Amsterdam, the Netherlands 62

Figure 35: Housing undergoing rehabilitation as part o the Czech Republic

upgrading programme 63

Figure 36: Service costs versus housing maintenance costs in Chisinau, 1995-2005 65

Figure 37: The London 2012 Olympics site is characteristic o area-based

urban renewal approaches where housing is developed on a large scale

in conjunction with residential, commercial, retail and

entertainment acilities 69Figure 38: Much o the contemporary housing stock in the UK is comprised o

Victorian low-rise brick terrace housing which is predominately either

private rental or owner-occupied 70

Figure 39: Well maintained multi-household housing in Salzburg, Austria 74

Figure 40: Variation within a typology: Row houses in Oslo, Norway 78

Figure 41: Medium-rise multi-houehold housing comprises much o the residential

abric o Spanish cities, such as this example rom Madrid 79

Figure 42: Traditional timber housing in Bergen, Norway 80


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xiv

LIST OF TABLES

Table 1: Measuring housing aordability 13

Table 2: Dwellings with basic services 23

Table 3: Housing tenure change, 1990 to 2004 35

Table 4: Reugees and displaced persons in Europe and North America 55

LIST OF BOXES

Box 1: Aordability constraints and the housing crisis in the United States 29

Box 2: Housing inequalities: Renters net worth declines 30

Box 3: Housing exclusion: the case o Roma communities 36

Box 4: The housing crisis o reugees and displaced people in Azerbaijan 54

Box 5: Council o Europe Bank: Social housing projects 58

Box 6: Social rental housing in the Netherlands: Dutch Housing Associations 59

Box 7: Vancouvers strategy to provide land or social housing 61

Box 8: Multi-household housing in Azerbaijan 63

Box 9: Housing rehabilitation programs in the Czech Republic 66Box 10: Dutch urban regeneration: an emphasis on deprived neighbourhoods 67

Box 11: Viennas Urban Renewal Program 68

LIST OF FIGURES


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1AFFORDABLE LAND AND HOUSING IN EUROPE AND NORTH AMERICA


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22

This vlumeprvides an

verview the state ardableland and

husing inEurpe and Nrth

America, cuntries thatcmprise the United

Natins EcnmicCmmissin r Eurpe(UNECE).

PART ONE


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3AFFORDABLE LAND AND HOUSING IN ASIA 3AFFORDABLE LAND HOUSING IN EUROPE AND NORTH AMERICA

1PART oNE

INTRODUCTION AFFORDABLE LAND

AND HOUSING INTHE REGIONAL

CONTEXT

Figure 1: The housing landscape o Istanbul, Turkey. UN-HABITAT/Matthew French


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4

countries o the global south but also Europeanand North American countries.

Volume ocus and objectives

Tis volume thereore ocuses on housingconditions and policy responses to major housingchallenges in the 56 European and NorthAmerican countries o the UNECE (Figure 2).Given the immense diversity o housing responsesthe emphasis is on practices that are conducive tothe provision o aordable land and housing.

Te volume has three principal objectives. Firstly,it explores major regional trends in housingconditions with an emphasis on availability,quality and tenure choice o housing in dierenthousing systems. Secondly, it analyses housing

policy responses to address major challenges suchas growing aordability problems, access to socialhousing and improvement o substandard housingconditions. Particular emphasis is given to theurban dimension o aordability in the contexto economic, social and political change. Tirdly,the volume provides some recommendationsor local, national and international policyinitiatives that could contribute to the provisiono aordable housing.

As will be shown in Section 1.4, the historictrajectory o housing supply and consumptionsince 1945 varies considerably between countries.Teir historic experiences largely congurecontemporary housing conditions and access,yet, as will now be shown, so too does the rapidurban, social, and economic transormations that

Figure 2: Map o European and North American countries (UNECE countries) included in this volume

PART ONE

1. INTRODUCTION AFFORDABLE LANDAND HOUSING IN THEREGIONAL CONTEXT

Aordability: a call or action

Ensuring universal access to aordable land andhousing requires urgent global attention. Whilein dierent countries and regions the specicitieso the challenge vary, the central issue remains:housing that is adequate and aordable isincreasingly out o reach or a large proportion othe population in the vast majority o countries.

Tis volume provides an overview o the stateo aordable land and housing in the region othe United Nations Economic Commission orEurope (UNECE), reerred to in this publicationas Europe and North America. Tis region isprincipally dened and united by geography:as the name suggests, it includes Western andEastern European countries. It is also, in manyways, united socio-politically: it includes WesternEuropes traditional North American associatesCanadaand the United States o America (US).

Compared with the regions o Asia, Arica,and Latin America and the Caribbean (LAC),Europe and North America presents distinctivechallenges or aordable land and housing. Asthis volume highlights, housing aordability isan issue in all countries, not only in developing


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Figure 3: European urbanization trends compared ith other regions

have categorised European and North Americancountries in the last decade.

1.1 EUROPEAN AND NORTHAMERICAN COUNTRIES:

DISPARITY AND SIMILARITYUrban, social, and economic change

Unsurprisingly, given the economic, political andhistoric dierences o countries that constitutethis sizeable region, there is notable divergencein housing provision systems. Yet in comparisonwith Asia, Arica and Latin America, Europeanand North American countries also sharemany urban, social and economic trends andcharacteristics.

Compared with other regions, Europe andNorth America is overwhelmingly urbanized,with more than 75 per cent o the populationconcentrated in urban areas (Figure 3). Te levelo urbanization in Western Europe is 80 per cent,with the United Kingdom (UK) and Belgiumexceeding 90 per cent. In North America over 80per cent o the population is urbanized. Countriesin transition have an average rate o urbanizationclose to 61 per cent, which is considerably higherin the largest countries: the Russian Federation

(73.3 per cent), Poland (62.0 per cent), theCzech Republic (74.5 per cent).

With the exception o seven megacities (NewYork, Los Angeles, Paris, Istanbul, Moscow,London, and Chicago) the main cities in the

region are mostly under 3 million with mediumdensities, and stable or low-growth population(growth rates under 1 per cent). Annual urbangrowth rates in Italy, Portugal and urkey arecomparable to those in the United States andCanada, between 1.1 and 1.4 per cent. However,the projected annual urban growth is higher than2 per cent in less urbanized countries such as

Albania, Azerbaijan, ajikistanand Uzbekistan.

Such high levels o urbanization create signicantchallenges or the provision o aordable housingin large cities. Despite the notable economicsuccess o major urban centres in European andNorth American countries, globalisation hasexacerbated social polarisation and urban poverty.

In the countries in transition, the reorms romcentrally planned to market-based economieshave added another layer o complexity.

In many o these places the decline in livingconditions is accompanied by rapid deteriorationo existing housing, homelessness, and ormationo inormal settlements in peri-urban areas.1 Teurban poor are especially vulnerable to economicshocks. Tey oten lack access to services, saetynets and political representation. Cumulative

disadvantages, oten dened along the lines ogender, age, and ethnicity, create widening socialdierences between social groups, with low-income, single-parent or women-led householdsthe worst aected by limited options to secureadequate and aordable housing.

Figure 3: Regional percentage o the population living in urban areas and urbanization growth projections or2010-2015. Surce: UN-HABITAT, 2009

WesternEurope

Percentageurban

Country/region

Forecasturbangrowth

percentage(2010-201

5

NorthernEurope

NorthAmerica

EasternEurope

SouthernEurope

Europe Latin Americaand the

Caribbean

Oceania Asia Africa

90 4

3.5

3

2.5

2

1.5

1

0.5

-0.5

0

80

70

60

50

40

30

10

20

0

Percentage urban (2010) Forecast urban growth (2010-2015)


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6

In addition to housing challenges associated

with urbanization and poverty, many countriesare aected by war or civil conicts. Almost 7million have become reugees or are internallydisplaced (IDPs). Military conict and violencein the Balkans and Northern Caucasus hascaused long-term stress or the housing systems othese countries. As a result o conicts in Bosniaand Herzegovinadisplaced people are estimatedto be 2.5 million and in Serbiaand 1 million inMontenegro alone.

In the economic realm, countries with traditionalmarket economies have experienced strongeconomic growth and major progress in theirstructural reorm agenda in the past decade.Te growth trajectory has been uneven but ithas delivered better living standards in WesternEurope, North America and some o the CentralEuropean countries.

Te benets o regional economic growth,however, have not been shared widely. Income

polarisation has increased, perhaps moredramatically in countries in transition, andunemployment has remained high. In Portugal

PART ONE

the income o the top 20 per cent is 7 timeshigher than the income o the bottom 20 percent. Likewise, in Spain, Greece and Estonia, theincome o the top quintile is 6 times higher thanthe income o the bottom quintile. In contrast,this ratio is only 1 to 3 in Slovenia, Swedenand Denmark.2 Tis is a major source o socialinequality, which paralleled with unemploymentcreates major challenges or social cohesion andaccess to housing and basic services or low-income households.

Dierences in economic growth andunemployment rates among countries havebecome more pronounced due to dierentstructural adjustment policies.3 Tese policiesand their associated economic restructuring

have created signicant challenges or particulargroups such as the long-term unemployed,low-skilled workers and young people withlimited work experience.4 Te variable economicperormance across Europe and North Americaaects the housing demand and interest rates butis perhaps most visible in the varying level o newhousing provision in respective European andNorth American countries.

Population growth in the region has remained

modest less than 0.5 per cent in WesternEurope and 3 per cent in North America, mostlyattributed to immigration. Many countries intransition have experienced years o negativepopulation growth, a result o emigration, lowerreproduction rates, and responses to economichardship.

While demographic changes are relativelymodest across Europe and North America,poverty has increased. Te reality is that over 74

million people in the European Union were atrisk o poverty in 2005, with one in six peopleexperiencing poverty.5 Groups at risk are thelong-term unemployed, large or one-parentamilies, people with a low level o education;and increasingly ethnic minorities and Romacommunities. Some o the common driversare unemployment or jobless growth, but alsoregional inequalities and inadequacy o the socialprotection systems.6, 7

Te dimensions o poverty in CIS are quitedierent. Te sub-region accounts or the largestshare o people living in absolute poverty. While at

COMPARED WITH

OTHER REGIONS,

EUROPEAN AND

NORTH AMERICAN

COUNTRIES ARE

OVERWHELMINGLY

URBANIZED, WITH

MORE THAN 75 PER

CENT OF THE POPULATION

CONCENTRATED IN URBAN

AREAS. SUCH HIGH LEVELSOF URBANIZATION CREATE

SIGNIFICANT CHALLENGES FOR

THE PROVISION OF AFFORDABLE

HOUSING IN CITIES.


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the start o the reorm process poverty in countriesin transition did not exist, in the present sense othe concept, today more than 100 million peopleare now classied as poor.8 Te share o peopleliving on less than 1 USD per day is alarminglyhigh in the Republic o Moldova(22 per cent),Uzbekistan (21 per cent) andArmenia(12 percent). Te move towards a market economyand democracy has ailed to deliver balancedbenets to all countries in transition and/or toall social groups. It is widely acknowledged thatthe second generation o policy reorms is drivenby a more sober reection that market ailuresneed to be addressed more eciently and that thesocial protection o vulnerable groups is perhapsthe most important aspect o public policyintervention.9

Te contemporary challenge o aordable landand housing provision

Tere is considerable contemporary divergencein housing patterns, typologies, and conditionsin European and North American countries.Broadly speaking, housing quality and availabilityin longstanding European Union (EU) WesternEuropean member countries is higher thanconditions in Central and Eastern European

countries.

10

Yet such simplied statements ignorethe specicities and contradictions that prevail,which this volume explores.

Unlike countries in Arica and Asia, manyEuropean and North American countries haveno sizeable housing decit per se and their

proportion o inormal, un-serviced slums isrelatively small. Many European and NorthAmerican countries have a long history andconsiderable experience o aordable socialhousing provision and their land and housingnance mechanisms are relatively well developedwhich acilitates and widens access to housing.As demonstrated above, compared with mostAsian and Arican countries, projected urbanand population growth in European and NorthAmerican countries is low, and European andNorth American countries are predominantlyurban.

Aordable land and housing problems in Europeand North America stem rom dimensions oaordability that are less prevalent in Arica, Asiaand LAC. Rising socio-economic inequalitiesare gentriying and dividing UNECE cites andmaking housing increasingly unaordable orlow- and middle-income households. In South-Eastern Europe housing costs have increasedsignicantly over the last two decades.11 WesternEuropean cities in particular are suering romincreasing homelessness as vulnerable groupsare nancially excluded rom home ownershipand rental markets.12 Te sub-prime nancialcrisis that originated in the housing marketso the United States in 2008 has had severerepercussions on housing aordability bothwithin North America and across the globe.

Te transition to a market economy in post-Soviet countries has placed enormous pressure

Figure 4: The dense historic urban orm o Florence, Italy. Photo UN-HABITAT/Matthew French


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8 PART ONE

on households to obtain, retain and maintainan adequate and aordable housing unit inthe ace o increasing housing-related servicecosts.13 Te removal o government subsidies,the lack o commercial housing nance, the lacko new housing construction, the increase inconstruction costs, the lack o rental housing andthe almost complete retraction o governmentinvolvement in the housing sector are some o themany actors that congure the lack o housingaordability in Eastern European countries.

Te housing stock in most Eastern Europeancountries is comprised o low-cost multi-storiedapartment blocks, built between the late-1950s and early-1980s, which are extensivelydeteriorated and poorly managed. Such high-rise

panel housing accounts or upwards o 25 percent o housing in large cities, and even more inormer industrial cities. Te issue, thereore, isnot one o a housing shortage but o insucientmaintenance where the adequacy, in termso quality o housing and housing services is aproblem.

A nearly unanimous belie in homeownershiphas marginalised rental housing and as a resultdrastically reduced rental housing stock, even

though this modality is a vital tenure option ormany households.14 Tis is especially the casein Eastern Europe where home ownership ratesare well above those in Western Europe andwhere there is little government social housing.Governments in European and North Americancountries have largely retreated rom providingsocial housing in avour o enabling the market,yet the market has not provided land and housingthat is aordable to all.

Recent trends suggest that governments are takinga more active role in addressing the housingsector, in particular in supporting the productiono social housing. For example, Polandrecentlylaunched a social housing programme alongsidesupporting non-prot organisations to providehousing or middle-income households.Likewise, in the Czech Republic a programmewas launched in 2003 to provide subsidies orconstruction o new ats that are produced andsupported by local municipalities.

In many European and North American countriesurban land management and use is inecientand is not available or aordable housing at

a scale that is required due to inappropriateregulations and zoning, private interests tomaximise prots, and in many cases a lack opolitical will at municipal levels o governmentto support aordable housing provision. As willbe shown, however, several Western Europeancities are demonstrating the opportunities orurban renewal and environmental rehabilitationprojects where housing or households on low-incomes can be accommodated. Such projectsare an example to Eastern and Southern Europeor how to maximise urban land utilisation,improve public spaces and transport, and developinclusive cities with aordable housing provisionas a key component.15

Although there is some evidence o aordable

housing provision in European and NorthAmerican countries, the dimensions outlinedabove combine to produce the challenge that thisvolume addresses: Adequate land and housingis becoming increasingly unaordable or a vastproportion o the population in European andNorth American countries. Let unaddressedthese dimensions o housing aordability posea serious problem or these countries.16 Tedimensions, however, have a history. Tey arethe product o changing economic, political and

social characteristics o national and internationalhousing sector development. Tereore, beoreexploring aordability issues in greater depth, itis important to situate contemporary UNECEhousing aordability dimensions within theregional historic context.

1.2 A BRIEF HISTORICALSNAPSHOT OF HOUSINGPOLICY AND PRACTICE

TRENDS SINCE 1945In order to understand the contemporary situationo aordable land and housing in European andNorth American countries, it is important to beaware o the historical development o housingpolicy and practice. Tis section, thereore,provides a broad but brie overview o housingin the region since 1945, ocusing primarily onWestern and Eastern Europe.17

Ater World War wo (WWII) Western

European governments played a undamentalrole in shaping housing production. It was aradical departure rom pre-WWII approaches


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where governments had only a nominal role inhousing provision, and during the war whenhousing production was negligible. Te periodrom 1945 until the early 1960s is considered therecovery phase.18 Te ocus was on repairing war-damaged areas and alleviating the severe housingshortages. Te dominant housing typology waslarge scale social housing, which was heavilysubsidised, directed rom public resources andmotivated by the need or large quantities ohousing at low-cost.

For the decades ollowing WWII, EasternEuropean housing was also typied bycentrally administered government housingprovision and control. While there certainlywere dierences between countries, they can be

broadly seen to be part o the East EuropeanHousing Model.19 Housing was viewed as asocial right that was to be guaranteed by thegovernment. It was not a commodity witheconomic dimensions but rather a social serviceand consequently, housing production, allocationand consumption was under direct control bygovernments.

Eastern European housing was low-rise, two-to three-storey wood and brick houses until

the mid-1950s when high-rise housing blocksbecame the increasingly dominant housingtypology. Tis change paralleled the move tohigh-rise housing orms in Western Europeand North America, which responded to newconstruction technologies and systems. Industrialtechnologies, notably preabrication and pre-castconcrete components, acilitated housing on alarger scale while at the same time-it was argued-they reduced construction cost and time. Indeedbetween 1956 and 1960 housing production

roughly doubled rom the previous ve years,20

although, overall, housing remained costly,o low quality, and did not eliminate housingshortages.21

During the 1960s and early-1970s direct large-scale public housing provision was at its peakin most Western European countries. Housingsupply had been signicantly increased largelythrough high-rise housing developments. Alarge proportion o the housing stock was rentalhousing, oten public, subsidised social rentalhousing managed by municipalities and localcouncils.22 As a tenure modality, public rental

housing thrived until the mid-1970s in the UKand into the 1980s in Sweden. By the mid- tolate-1970s, however, the debate surroundingthe benets and disadvantages o rental versushomeownership intensied.

During the early-1980s a paradigm shitoccurred in the Western European housingsector. Te economic and social context waschanging and the role o the government indirect housing provision was increasinglyquestioned. Te governments role changedrom that o provider o housing to enabler othe housing sector to unction. Principally thisinvolved a reduction in government expenditureon housing and removal o inecient subsidies,

especially rental and construction subsidies.Publicly-owned housing was sold to sittingtenants, or a low or nominal cost. Althoughsome countries maintained relatively highlevels o public involvement in housing, themajority adopted the neo-liberal reorms deemednecessary to enable a well-unctioning privatehousing market. Rental housing was marginalisedand private individual home-ownership ratesincreased.

While Western European housing marketswere liberalising, Eastern Europe retained itsocus on centrally planned and administrated

THE TRANSITION

TO A MARKET

ECONOMY IN

POST-SOVIET

COUNTRIES HAS

PLACED ENORMOUS

PRESSURE ON

HOUSEHOLDS TO OBTAIN,

RETAIN, AND MAINTAIN AN

ADEQUATE AND AFFORDABLE

HOUSING UNIT IN THE FACE OFINCREASING HOUSING-RELATED

SERVICE COSTS.


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10 PART ONE

housing.23 Eastern and Western Europe housingpolicy and practice thereore diverged the mostduring the decade rom the mid-1980s to themid-1990s.

Te housing sector in Eastern European

countries undamentally changed as a result oeconomic, political and social changes duringthe early 1990s. Countries transitioned romcentrally-planned housing sectors to market-orientated housing. Te objective was to applymarket principles, gradually but not slowly, to thehousing sector. In some cases the liberalisationwas even much more considerable than in someWestern European countries.

Te most signicant change was the wide-

scale and quick selling o public housingunits. Houses were transerred to their occupantsthrough various measures, oten at reducedrates, through various schemes (or instancevouchers or cheques), or or ree (apart rom anominal ee). For example, inArmeniain 1990,government and local authorities owned nearlyhal o all housing (49 per cent) but by 2001 theyowned only 3.9 per cent.24 Te major problem inmost post-Soviet countries was the non-existentor insucient legal and institutional rameworks

to support a well unctioning housing sector andprivate ownership by individual households.

In shiting away rom government provisionand subsidy o housing to a market housing

where the costs o housing were to be borne byindividual households, housing afordabilitybecame a serious issue.25 Housing related costsincreased signicantly ater the transition.26

With the reorms, GDP and real householdincomes plummeted, high ination producedhigh interest rates, and the banks raised interestrates on new loans. Housing nance demandsignicantly lowered. For example, in Hungary,loans in 1993 were only 47 per cent o their1990 level.27 Downward mobility was common.Many households had to sell or move out o theirhouse and take a smaller house to pay o debts,oten or accumulated unpaid utility costs. Asmany households owned their units, the problemwas energy and utility costs (water, services,

garbage collection, district heating), which hadrisen considerably due to the deregulation andprivatisation o these services. Overall, pricesincreased aster than household income.28 Whilesome countries experimented with housingallowance programmes, these were seldomeective due to a lack o institutional capacityand limited resources.

Te socio-political changes led to a signicantdecline in housing production in most ormer

Soviet Republics. People could not pay or newhousing at market rates: only a select ew at theupper-income level. Housing demand increasedbut supply did not match it, so house pricesincreased. For example in Ukraine, 179,000

Figure 5: Derelict unused accommodation in Dublin, Ireland. Photo UN-HABITAT/Matthew French


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public housing units were produced in 1990but production ell to only 9,000 units in 2001.Te private sector did not make up the balanceand consequently total housing production ellrom 279,000 units in 1990 to only 64,000 in2001.29 In most countries housing productionhalved compared with pre-transition levels.30

Furthermore post-Soviet countries inheritedconsiderable quantities o high-rise housing odubious quality. Te quality was a result o thedecision to use the cheapest orms o constructionmaterials and methods.31

Nevertheless, housing markets have graduallyimproved in many Eastern European countriesater the shock o the initial transition period.Policy responses and macroeconomic stability is

improving housing supply (public and private),especially in the Baltic region, Poland, theCzech Republic, and Hungary.32 Housingproduction is increasing: it is now between 60to 80 per cent o the level o production duringthe socialist era,33 although the majority o this isprivate owner-occupier housing, indicating a lowavailability o rental housing remains an issue tobe addressed.34

As a result o the 2008 sub-prime housing

crisis that originated in United States,afordability, especially in North Americaand Western European countries, has becomean even more serious social and economicissue. Housing nance is signicantly harderor households to obtain, house prices havealarmingly shited, and unemployment hasrisen to relatively unprecedented levels.Consequently, many households have lost theirhomes to oreclosure, and or others purchasinghousing is increasingly dicult. Rents are oten

exorbitant resulting in households having tospend a considerable proportion o their budgeton housing expenditure and social housing isincreasingly dicult to access and its supply inmany countries is now at historic lows.

Clearly there have been many ideological,theoretical, policy and practice shits in thehousing sector over the last 60 years. Evenso, under all economic and political systemsachieving universally afordable and adequate

housing has remained elusive. Certainlyprogress is being made and the proportion othe population that lives in adequate housing

is higher now than ever beore, yet the historicchanges illustrate the act that the housingsector is undamentally shaped by many actors-policymakers, local authorities, private enterprise,households, among others-and whether housing

aordability improves or worsens depends onthe many actors, in particular the political willo national governments and local and regionalauthorities.

1.3 HOUSING AFFORDABILITY:ITS COMPONENTS ANDMEASURES

Aordable housing is broadly dened as thatwhich is adequate in quality and location and doesnot cost so much that it prohibits its occupantsmeeting other basic living costs or threatens theirenjoyment o basic human rights.35

AFFORDABLE

HOUSING IS

BROADLY DEFINED

AS THAT WHICHIS ADEQUATE

IN QUALITY AND

LOCATION AND

DOES NOT COST SO

MUCH THAT IT PROHIBITS

ITS OCCUPANTS MEETING

OTHER BASIC LIVING COSTSOR THREATENS THEIR

ENJOYMENT OF BASIC

HUMAN RIGHTS. HOUSING

AFFORDABILITY, HOWEVER,

IS MULTI-DIMENSIONAL AND

INVOLVES MORE THAN THE

OFTEN-USED SIMPLIFIED

CONCEPTION OF THE RATIO OF

HOUSE PURCHASE PRICE TO

HOUSEHOLD INCOME.


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12 PART ONE

Housing aordability is aected by many actors.Figure 6 outlines the basic components o housingaordability or households. Aordability isprincipally set by two main variables: capitalvariables (house purchase costs) and occupationvariables (costs associated with keeping thehouse).

Te ability o a household to purchase a house isaected by the purchase cost (which is the sumcost o land, inrastructure, building materialsand labour and prot) and the ability to nancethe purchase (principally set by the mortgagedown payment requirement and the balance ohousehold savings).

Once a house is purchased, the ability o ahousehold to occupy and pay or the house isinuenced by material inputs (land lease andrates, services costs, and building maintenance)and nance inputs (loan repayment period and

interest rates (which are inuenced by scalpolicy, etc), and household income minus non-housing expenditure).

Housing aordability, thereore, involves morethan the oten-used simplied conception ohouse purchase price to household income.Aordability is multi-dimensional and it is thedimensions outlined in Figure 6 that this volumeocuses on. For example, housing aordabilityproblems in many Eastern European countriesstem rom the occupation dimensions o theaordability diagram. High service and building

maintenance costs make adequate housingunaordable. Another example is the ability oNorth American households to purchase a houseis constrained by the increasingly unavailable orrestrictive housing nance, in particular higherdown-payment requirements since in the 2008economic crisis.

Measures o aordability

While there is no universally agreed measure owhat constitutes aordable housing, there are

three common measures, which are associatedwith two components: housing costs andhousehold income (able 1).36 Te rst is house

Land Land lease/rates

Service costs

Building maintenance

Interest rates and

loan period

Non-housingexpenditure

(minus)

Income

Inrastructure

Building Materials

Labour & Prot

Material/ House Inputs

Finance

Income and expenditure

Material/ House Inputs

CAPITAL VARIABLES OCCUPATIONAL VARIABLES

(minus)

Savings and other assets

Outstanding debts

Don payment

requirement

Finance

Savings and debts

Housingaordability

or households

HousePurchase

Cost

HouseOccupation

Cost

Ability tonancially

service

Ability tonance

purchase

Figure 6: Basic components o housing aordability


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price to income ratio. Te ratio is calculated bydividing the median house price by the medianhousehold income. It shows the number oannual median salaries it takes to buy a median-priced house. Countries that have particularlyhigh house price-to-income ratios are typicallythose with high land prices and constructioncosts.37 Te second measure is house rent-to-income ratio. Tis ratio is calculated by dividingthe median annual rent by the median annualrenter household income.

While there is no universally agreed ratio orpercentage at which owner-occupied or rentalhousing is deemed unaordable, these twomeasures enable cross-country comparisons aswell as the ability to track housing aordability

within a country over time, as incomes and houseprices rise and/or all.

Te third measure o aordability is theresidual income assessment. It is representedas a percentage o household income spent onhousing-related expenses and demonstrates a

households ability to nancially service housingwithout compromising on necessary non-housingexpenditure.38 Although there is no universallyagreed percentage, housing is generally deemedaordable when a household spends less than

30 per cent o their income on housing relatedexpenses, such as mortgage repayments (orowner-occupiers), rent payments (or tenants),and direct operational expenses such as taxes,insurance and service payments.39, 40

1.4 STRUCTURE AND CONTENT OFTHE VOLUME

Denitions: regional and country groupings

Tis volume uses the analytical ramework o

the United Nations Economic Commission orEurope (UNECE) membership countries todene Europe and North America. While thereport is not specically addressing the UNECEregion per se, it ocuses on the 56 countriesthat comprise the UNECE. UNECE membercountries include some o the richest economies

House-Price-to-Income

Ratio

House-Rent-to-Income

Ratio

Housing-related

expenditure as apercentage o income

Measure Median house pricedivided by medianhousehold income. Teratio o the median ree-market price o a dwellingunit and the medianannual household income.

Median annual rent dividedby median annual renterhousehold income. Incomesare median gross incomeso private and public renterhouseholds.

Annual median householdincome divided byannual median housingexpenditure (mortgagepayments, rent, services,taxes, insurance, etc).

Warningrend

Very high or rising ratiosimply that either there

is no eective housingmarket or that landis extremely scarce,generally owing toregulatory ineciencies orrestrictions.

High values imply thatsupply is not keeping up with

demand and aordability islow. Low values usually implycontrolled tenancies or a highproportion o public housing.

A high percentage indicateshousing is negatively

impacting on meeting non-housing basic needs andthe housing market is notunctioning properly.

Signicance A key measure o housingaordability. Also generallyregarded as the singleindicator that givesthe greatest amount oinormation about housingmarkets.

A key measure o housingaordability, especially orlow-income households whomay be unable to purchasehousing.

It can account or essentialnon-housing expendituresuch as ood, water,clothing, schooling,transport, etc and thedecisions households makeregarding housing andnon-housing expenditures.

Table 1: Measuring housing aordability


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14 PART ONE

in the world and some o the poorest; countrieswith long and strong democratic traditions andothers with newly emerging democratic regimes;

countries with some o the highest levels ohousing provision and other with the mostsignicant housing problems mirrored in housingdeprivation and homelessness.

Tese immense dierences have a prooundeect on the housing systems in these countries,making such comparative evaluations dicult.Nevertheless, where possible, housing challengesand policy responses are reviewed on a subregionalbasis using our clusters:

Western EuropeAndorra, Austria, Belgium, Cyprus, Denmark ,Finland, France, Greece, Iceland, Ireland, Israel,Italy, Germany, Luxembourg, Malta, Monaco,Netherlands, Norway, Portugal, San Marino,Spain, Sweden, Switzerland, urkey, UnitedKingdom.

North America:

Canada and the United States.

Central and Eastern Europe (CEE):Albania, Bosnia and Herzegovina, Bulgaria,Croatia, Czech Republic, Estonia, Latvia,

Hungary, Republic o Macedonia, Lithuania,Montenegro, Poland, Romania, Serbia, Slovakia,Slovenia.

Te Commonwealth o Independant States(CIS):

Armenia, Azerbaijan, Belarus, Georgia,Kazakhstan, Kyrgyzstan, Moldova, RussianFederation,41 ajikistan, urkmenistan, Ukraine.

Data sources and analysis

Eorts have been made to reect the enormousheterogeneity in the UNECE as this hasimplications or the signicant dierences in the

provision o housing and the types o housingpolicy responses. Te analytical assessment isbased on existing inormation rom reports,such as the most recent UN-HABIA GlobalReports on Human Settlements and Governmento the World Cities Reports. Te analysis drawson comparative evaluations on the topic carriedout by major international organisations andresearch institutes, as well as Land Reviews,country specic assessments o aordable housingalternatives, and UNECE Housing Proles (see

Box 1). It incorporates statistics and housingindicators rom ocially published sources oinormation and international databases.42, 43

> Box : UNECE Country Housing Proles

Since 1996 the UNECE has undertaken country

housing sector reviews and published theseas Country Housing Proles. The country

housing prole is a process-oriented exercise.

At its core is an analytical study on the housingsector, drated by independent international

experts. The proles represents a tool orGovernments to analyse their housing policies,

strategies, institutional and nancial rameworks

or the housing sector and to compare theprogress made internationally and provide

recommendations or improving policies andpractices.

The Proles constitute a strategic analysis o

a countrys entire housing sector. Each prolecovers ve major areas: (i) the ramework or

the housing sector transition; (ii) the existinghousing stock and new housing construction;(iii) the institutional ramework; (iv) the legal

ramework; and (v) the nancial ramework.

As a voluntary exercise, the Country Prole studyis undertaken only at the request o the country

itsel. The project starts with a compilation

o relevant data on the housing sector o thecountry to be reviewed. An international team o

experts rom all over Europe, including countries

in transition, is then ormed. The ndings romthe study is published in English and translated

to the national languages or distribution tointerested parties.

To date the ollowing Housing Proles have

been prepared and published: Bulgaria (1996),Poland (1998), Slovakia (1999), Lithuania

(2000), Romania (2001), the Republic o

Moldova (2002), Albania (2002), Armenia,and the Russian Federation (2004), Serbia and

Montenegro (2006), Georgia (2007), Belarus(2008), Kyrgyzstan (2010) and Azerbaijan

(2010). The reader is reerred to thesepublications or more in-depth analysis on thehousing sector in these countries than can be

presented in this volume.

Surce: UNECE (2011) http://live.unece.rg/hlm/prgm/

cph/welcme.html


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It should be noted that most countries in Centraland Eastern Europe have only census-basedinormation with limited indicators; Inormationon the aordability o housing is non-existent anddata on house prices and rents are unreliable. Tesituation in the Commonwealth o IndependentStates (CIS) is even more challenging since theocial statistics on housing include only a handulo monitoring indicators. Tereore, it shouldbe recognised that access to reliable and up-to-date data is problematic and poses challengesor comparative analysis on all dimensions oaordability.

Volume structure

Part One has provided the introductory, historicaland conceptual setting or the study o aordablehousing in Europe and North America. It hashighlighted the major urban, economic, social,and historic actors in the region underlyingdierences in housing provision and countryspecic housing challenges.

Part wo canvases the state o aordable landand housing in Europe and North America.It systematically reviews trends in housing

conditions with respect to housing needs, quality,aordability, tenure modalities, and dominantbuilding types. Te emphasis is on dierencesand similarities in housing conditions andon persisting problems with housing decits,substandard housing and inormal settlements.

Part Tree explores the critical linkages betweenhousing challenges and policy responses. Itocuses on new housing construction approaches,new subsidy regimes, responses to homelessnessand the reuge crisis, provision o social housing,land shortages or aordable housing, and theprovision o aordable housing through area-based renewal and social inclusion. Te analysishighlights major achievements and challenges inaddressing the multiple dimensions o aordablehousing provision.

Part Four outlines the key lessons learnt,particularly over the last two decades. It providessuccinct recommendations or how to increasethe regional supply o aordable land andhousing. Finally, the conclusion recaps the majorthemes and draws attention to ways orward orlocal, national and global action.


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16 PART ONE

PART ONE ENDNOTES

1 UN-HABIA (2010). State o the Worlds cities. Nairobi: UN-HABIA; UN-HABIA (2005c). Housing and Property Rights: Bosnia andHerzegovina, Croatia, Serbia and Montenegro. Nairobi: UN-HABIA.

2 Eurostat (2007). Europe in Figures 2006/07. Brussels: European Communities.

3 Economic Commission or Europe (ECE) (2006c). Guidelines or Social Housing, Geneva: United Nations Economic Commission or Europe.

4 European Bank or Reconstruction and Development (2006). ransition Report 2006. London: EBRD

5 Eurostat (2007).

6 European Commission (2004). Te Situation o Roma in an Enlarged European Union. Brussels: European Commission, Directorate-Generalor Employment and Social Aairs, Unit D3.

7 Edgar, B., J. Doherty, and H. Meert. (2003). Access to Housing Homelessness and Vulnerability in Europe. London: Policy Press.

8 World Bank (2002). ransition the First en Years: Analysis and Lessons or Eastern Europe and the Former Soviet Union. Washington, D.C.:Te World Bank. Europe and Central Asia Regional Department (ECA).

9 UN-HABIA (2005b). Global Report on Human Settlements 2005. London: Earthscan; UN-HABIA (2010). State o the Worlds cities.Nairobi: UN-HABIA.

10 Norris, M. and P. Shiels. (2007). Housing Inequalities in an enlarged European Union: patterns, drivers, implications. Journal o European SocialPolicy. 17(65).

11 Leckie, S. (2002). Implementing Housing Rights in South East Europe. Regional Housing Issues Prole. Regional Consultation on MakingCities Inclusive, Belgrade, 25-26 February 2002. UN-HABIA

12 Priemus, H., M. Kleinman, D. Maclennan, and B. urner. (1993). European Monetary, Economic and Political Union: Consequences orNational Housing Policies. Te Hague: Delt University Press.

13 osica, I. and J. Hegedus. (2001). Housing Problems in South East Europe. South East Europe Strategic Review on Social Cohesion, Council oEurope Housing Network, SEER/Housing, (2001) Vol. 2, November 2001.

14 Priemus, H. and S. Mandic. (2000). Rented housing in Eastern and Central Europe. Special Issue, Journal o Housing and the Built Environment.15(3): 205-291.

15 European Investment Bank (2005). Housing Sector Study in Central Eastern and South-Eastern Europe. EMC: Budapest.

16 European Investment Bank (2005).

17 Te section draws largely rom: UNECE (2006) Guidelines or Social Housing, Geneva: UNECE, to which the reader is reerred or a moredetailed review than can be presented here.

18 Boelhouwer, P. and H. van der Heijden. (1992). Housing Systems in Europe, Part 1. Te Hague: Delt University Press, pp. 266-267.

19 osics, I. (1998). European Integration and the East-Central European Outsiders, In, Kleinman, M., W. Matznetter, and M. Stephens.European Integration and Housing Policy. London and New York: Routledge.

20 Durmanov, V. and D. Dubbeling. (2004). Ukraine: Inheritance o centralised planning. in, urkington, R., R. van Kempton, and F. Wassenberg.High-rise Housing in Europe: Current rends and Future Prospects. Delt: DPU Science, Delt University Press. p.204.

21 senkova, S. (2000). Housing in ransition and the ransition in Housing: Te Experience o Central and Eastern Europe. Soa: KapitalReklama.

22 Priemus, H. (2000). Recent rends in European Social Housing. International Workshop Social Housing in Europe Prague, October 6-7th,Institute o Sociology, Academy o Sciences o the Czech Republic.

23 senkova, S. and S. Lowe. (Eds) (2003). Housing Change in East and Central Europe: Integration or Fragmentation? Aldershot: Ashgate.

24 Economic Commission or Europe (ECE) (2004b). Country Proles on Housing: Armenia. Geneva: United Nations Economic Commissionor Europe. p. 15.

25 Struyk, R. (Ed) (2000). Homeownership and Housing Finance Policy in the Former Soviet Bloc: Costly Populism. Washington D.C: UrbanInstitute Press.

26 Hegeds, J. (2009). Housing Aordability Issues in Eastern and Central European Countries. Seminar on Housing, Social Inclusion and theEconomy. Social Situation Observatory- Network on Income Distribution and Living conditions. 21 April 2009, Brussels.

27 Struyk, R. (Ed) (2000). p.16.

28 Hegeds, J. (2009).

29 Durmanov, V. and D. Dubbeling. (2004). p. 208.

30 Struyk, R. (Ed) (2000). p.8.

31 Durmanov, V. and D. Dubbeling. (2004).

32 European Investment Bank (2005). Housing Sector Study in Central Eastern and South-Eastern Europe. EMC: Budapest.

33 European Investment Bank (2005).

34 UN-HABIA (2003). Rental housing: An option or the urban poor in developing countries. Nairobi: UN-HABIA; UN-HABIA(2011a). A policy guide to rental housing in developing countries. Quick Policy Guide Series. Vol. 1. UN-HABIA: Nairobi.

35 Te term aordable housing is oten used to describe a type o housing or low-income people, which has a variety o other names or instancesocial housing, public housing, and low-cost housing. In this guide, however, it does not reer to a type o housing (i.e. low-cost, social orpublic housing) but rather relates to the nancial aordability o housing with respect to occupants income.

36 You, N. (2007). Making the market work or pro-poor urban housing. 1st Asia-Pacic Housing Forum. Singapore.

37 UNCHS (2001). Te State o the World Cities 2001. Nairobi: UNCHS (Habitat).

38 Yang, Z. and Y. Shen. (2008). Te Aordability o Owner Occupied Housing in Beijing. Journal o Housing and the Built Environment. 23:317-335.

39 UN-HABIA (2011b). A policy guide to rental housing in developing countries. Quick Policy Guide Series. Vol. 1. UN-HABIA: Nairobi.

40 Freeman, A., R. Chaplin, and C. Whitehead. (1997). Rental aordability: A review o international literature. Discussion Paper No. 88,Cambridge: Department o Land Economy, University o Cambridge.

41 Although some inormation on housing conditions in the Russian Federation is included or comparative purposes, the overview o housingpolicy excludes Russian reorms are to be covered in a separate study as well as issues pertaining to housing nance.

42 In Canada, or example, in addition to the Census, Starts & Completions Survey, Market Absorption and Rental Market Surveys are carried outon an annual basis in urban areas.

43 For example, national censuses carried out in countries, typically every ten years although Germany and the Netherlands have a census every ouryears, Canada and the United States every ve. Within the EU, Ministries collaborate to produce an annual edition o Housing Statistics in theEuropean Union. Data are provided by national ministries responsible or housing well as by the European Mortgage Federation and Eurostat

Tese reports are a major source o the comparative data used in this study.


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Figure 7: Multi-storied housing dominates the housing stock in Malta Photo UN-HABITAT/Matthew French


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1818

Dierencesin husingcnditinsacrsscuntriesreect the

legacy past plicies,

institutinal divisin respnsibilities rthe prvisin landand husing as well ashusing preerencesand chices.

PART TwO


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19AFFORDABLE LAND AND HOUSING IN ASIA 19AFFORDABLE LAND AND HOUSING IN EUROPE AND NORTH AMERICA

2PART TWo

THE STATE OFAFFORDABLE LAND

AND HOUSING

Figure 8: Multi-storied housing in Marseille, France.Photo UN-HABITAT/Matthew French


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20 PART TwO

2. THE STATE OFAFFORDABLE LANDAND HOUSING

Dierences in housing conditions acrosscountries reect the legacy o past policies,institutional division o responsibilities or theprovision o aordable housing as well as housingpreerences and choices.44 Tis section providesa quantitative and qualitative overview o majorcharacteristics o the existing housing systemsbased on recent data. A particular emphasis isplaced on dierences and similarities in housingdistribution, level o service provision (water,sewer, central heating), dominant building types

(single amily, multi-household, high-rise, etc.),and tenure choice.

Te quantitative and qualitative indicatorsare related to recent data on housing marketperormance demonstrated by dynamics inhouse prices and rents. A special section providesinsights into critical housing problems suchas substandard housing, slums and inormalsettlements.

2.1 QUANTITY, QUALITY, ANDDISTRIBUTION OF EXISTINGHOUSING STOCK

2.1.1 Availability o housing

Housing conditions in most European andNorth American countries have improved in thelast decade.45 Te general ratio o dwellings perthousand inhabitants is normally used as a crudeindicator o the adequacy o housing provision.

Te distribution varies, with Finlandand Francehaving the highest number o over 500 unitsper 1,000 residents, ollowed very closely byGreece, Sweden and Portugal. Te prevalence osecond homes and vacation homes are one reasonwhy these countries have high housing unit topopulation ratios. Countries in transition havelower levels, which, despite their lower levelo economic development, are neverthelesscomparable to those in Western Europe. Tenumber o dwellings per 1,000 people is lowest

in Albania (254/1000) ollowed by Poland(314/1000) and Slovakia(318/1000).

Although average dwelling oor area in CEEcountries tend to be 25 per cent smaller than inWestern Europe, the average distribution in termso persons per dwelling is similar. Overall, thelegacy o the socialist housing provision systemhas ensured a relatively higher availability ohousing than could be expected given the presentlevel o economic development. Presently, theGDP per capita in the sub-region is one third othe GDP average in the European Union (EU),which aects the amount o investment availableor improvement in housing conditions.

2.1.2 Housing decit and surplus

A decit o certain housing types

Housing shortages across most countries in

Europe and North America are oten associatedwith particular housing types, locations andqualities rather than the absolute shortage ohousing in general. Te question o housingdecits, particularly in Central and EasternEurope, has become less relevant to marketrealities. Declining population, emigration andchanging consumer preerences as well as abilityto pay have shaped housing demand in the lastteen years.

Studies point to a disproportionate supply oone type o housing, such as small, old-style,poorly located ats, whilst other housing types,particularly single-amily housing in goodlocations, are in chronic shortage.46, 47 Otenthere is a mismatch between the location o jobsand housing units in and around cities. Teexistence o such housing submarkets and theexpansive urban geography o larger countriessuch as Poland, Russia, Ukraine and Romaniacan make reliance on aggregate average housing

indicators misleading in understanding realhousing experiences.

Housing decits in Eastern European andCentral Asian UNECE countries

Tere are, however, severe housing decits in someEastern European countries. In countries such asKazakhstan, Kyrgyzstan, urkmenistan, andUzbekistan (dened as Central Asian countriesbut members o UNECE) there is evidence oabsolute housing shortages at the national level

and also in particular in the capital cities. Tesecountries experienced delayed urbanization with


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a recent rapid inux rom rural areas, whichhas contributed to much stronger urbanizationgrowth rates and exacerbating the pressure onlocal housing markets.

In ajikistan, or example, population growth

rom 1998 to 2005 was 16.5 per cent, whilethe growth in housing stock was only 9 percent. Housing area per capita at the end o2005 was 8.7 square meters, which is 27.5 percent less than the norm o 12 square meters percapita established by the government. Similarlyin Kyrgyzstan the population has grown rom4.7 million in 1997 to 5.1 million in 2005. Tecapital city, Bishkek, has over 200,000 migrantsrom rural areas reportedly experiencing acutehousing shortages. In Dushanbe, the capital

oajikistan, the citys population has reachedclose to 1 million due to rapid migration creatinga decit o 100,000 dwellings.48

A quantitative housing surplus

Many countries in the region have a surpluso housing. For example, close to 1 milliondwellings in the eastern part o Germany,extensively renovated ater unication, arevacant. Neighbourhood upgrading programmesin some countries are demolishing unoccupied

or unpopular housing, or instance in theNetherlands, Denmark and the UnitedKingdom.49

In Central and Eastern Europe, despite thepopular myths o housing decits, the housingsurplus ranges rom 786,000 units in Romaniato 58,000 in Albania. In terms o its share othe total stock, most countries in South-EasternEurope have a surplus in the range o 12 to 14per cent with Montenegro (24 per cent) beingan extreme case.50

Local housing market mismatches pose anadditional and oten neglected quantitativeproblem. Despite an overall surplus o housing,the census data indicate that many capital citiesin the region experience housing shortages andovercrowding. Dwellings on average tend tobe small, oten accommodate more than onehousehold, and the ratio o persons per room

is higher than one. For example, in Serbia 18per cent o the households (about 284,000)are classied as overcrowded. Tere are manycountries with more than 3 occupants per room.Evidence rom the census data in Albania,Bulgaria, Latvia, Ukraine and Romaniaindicate similar problems.51, 52

Underpinnings o the supply and demandmismatch

Part o the mismatch is related to migration,

especially the decit o aordable housing inhigh growth urban areas. Locations that have themost dynamic labour markets typically have the

Figure 9: A housing block in Warsaw, Poland. Photo UN-HABITAT/Claudio Acioly


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22

people are reluctant to return.53 Last but notleast, second homes and tourism houses, whichare not used or permanent habitation, are a veryimportant element o the housing markets inCroatia, Montenegro and Bulgaria, explainingthe high vacancy rate and the surplus o housingin these countries. In act, in Greece, Italy,France and Spain between 10 and 15 per cent oall dwellings are second homes.54

2.1.3 Housing quality

Water, sanitation, electricity and heatingsystems

Access to improved water and adequate sanitationin European and North American countries isone o the highest in the world. It stands at 94

per cent on average or water and 93 per cent orsewer and thereore the share o housing servicedwith piped water and sewer is much higher thanin other regions. Even allowing or denitionalchanges over time, the available data indicateoverall housing improvement over the last threedecades.55

greatest housing aordability problems becausepeople migrate to them in pursuit o employmentopportunities.

Te decit o aordable housing in certainurban areas also relates to inecient use o the

existing housing stock. For example, as data onvacancy rates in Figure 10 shows, more than athird o the housing stock in Greece is vacant.Tis gure is close to a quarter in Cyprus andBulgaria. Vacancy rates in most CEE countriesare higher than those in Western Europe, rangingon average between 10 to 14 per cent. Possibleexplanations as to why so many houses are vacantare the poor quality o such housing and the lacko housing demand in rural areas.

In some countriesAlbania, Bulgaria andRomaniahigh vacancy rates are reportedlydue to migration patterns. Absentee homeownersoten do not rent out these units, even in urbanareas where demand is high. In countries aectedby war, massive displacement o the populationhas resulted in higher vacancies in areas where

Surce: MIIR, 2006 and Tsenkva, 2005

PART TwO

Figure 10: Housing vacancy rates in selected European and North American countries

GreeceCyprus

Spain

Italy

IrelandPortugalFinland

Germany

DenmarkFrance

United Kingdom

Luxembourg

Netherlands

Sweden

BulgariaCroatia

RomaniaCzech Republic

Albania

Slovak Republic

SerbiaEstonia

SloveniaFYR Macedonia

PolandHungary

LithuaniaLatvia

WesternEurope

CentralandEasternEurope

% of total stock

0 5 10 15 20 25 30 35

33.2

24.1

24.014.0

12.5

12.312.0

11.6

11.010.9

10.19.0

5.35.1

3.70.3

21.9

20.712.0

10.68.8

8.26.3

6.13.

Documents

Affordable Land and Housing Europe and North America