[Publication] Housing affordability problems across socio-demographic groups

In Europe today, many people are struggling to find or afford housing. In the period since 2010, property sales prices have risen by 55% on average and rents have increased by 27%. For many people, increases in income levels have not kept pace. While the housing crisis is widespread, there are several population groups in the EU who are at greater risk of facing housing affordability problems. This in-depth analysis focuses on the challenges faced by younger people, households with dependent children and older people.

The analysis applies a framework to assess the four types of problems caused by unaffordable housing: housing exclusion, housing insecurity, financial strain caused by housing costs, and housing inadequacy. The findings show that younger people are particularly likely to face housing exclusion, households with children are more prone to problematic housing costs and housing insecurity and a sizable group of older people experiences housing inadequacy. Subgroups also face other types of housing problems, in varying ways. This in-depth analysis highlights that, while housing policies undoubtedly play a crucial role, part of the solution to address unaffordable housing also lies in non-housing policies.

Young people are one of the groups that are finding the current housing environment particularly challenging. Generally, this is not because of their age per se, but because they tend to be on lower incomes, have insecure employment contracts, or lack access to adequate social protection. Moreover, they are often looking for accommodation in urban areas where employment opportunities are concentrated. In some MSs, this has led to increased housing exclusion among young people, meaning that they are unable to afford to leave the parental home. When they do leave the parental home, they are more likely to be overburdened with housing costs and face higher levels of housing insecurity.

Many households with children struggle in the current housing market because the burden of housing costs leaves them with less resources to pay for other essential goods are services. For such households, they face additional costs in their day-to-day lives related to raising children. As such, among households that spend more than 40% of their disposable income on housing – the EU definition of housing cost overburden – households with children are more likely to report that they find it difficult to make ends meet. Within the larger group of households with children, single-parent households face particularly large challenges in the current housing environment. They face higher levels of housing insecurity and overcrowding and are more likely to live in poor quality dwellings.

Older people also face problems in the current housing environment. In general, they are the cohort most likely to own their home without a mortgage, but this does not mean that they do not struggle with housing costs. For these households, housing unaffordability often relates to utility and maintenance costs rather than rent or mortgage payments. This group is more likely to live in older dwellings that are energy inefficient and thus more expensive to maintain. These households are also less likely to engage in energy efficiency retrofits, suggesting that, without policy intervention, they will continue to struggle in this way. While older people are generally more likely to own their homes, for those older people who rent on the private market, they face a higher risk of being overburdened with housing costs.

When it comes to policy solutions, solutions in the form of supply-side measures (i.e. increasing and improving the available housing stock) have more potential to help relieve the affordability problems of the three vulnerable groups discussed than demand-side interventions. Supply-side solutions should consider not only the dwelling itself, but also the surrounding area – making sure that new housing units are well connected to services and jobs. This in-depth analysis also highlights that, to reduce housing unaffordability among the groups highlighted, measures do not need to be targeted only towards them. More universal measures benefit wider groups who face similar problems.

However, certain measures are particularly likely to address the problems faced by younger people, households with dependent children and older people. For example, for young people who are excluded from housing, the analysis highlights that they will be particularly positively impacted if supply is increased. For households with children who face housing insecurity, pro-active support systems that are triggered by missed rent, mortgage or utility payments, or by eviction notices would alleviate the housing problems they face. As for older people, because housing unaffordability often relates to utility and maintenance costs, they would benefit if policy incentives to encourage energy retrofits were better targeted to their needs, with solutions built-in to overcome the hurdles this group faces when undertaking renovations.