ANDREAS IBEL - BUILD EUROPE - THE HOUSING CRISIS IN THE EU - Filenews 17/5 by Angelos Angelodimou
The housing problem has now become a strong pan-European headache. And despite the fact that within the EU real estate markets are very different from each other, however, common factors arise, which lead to the same result. The reduced supply and consequently the increase in prices.
The president of Build Europe (a European organization that represents, as a lobbying body, national associations of real estate entrepreneurs and housing construction companies, based in Brussels) in an interview with "F" analyzes the factors that have led to this situation and proposes solutions to reduce prices. At the same time, he records the ways to deal with the increase in energy costs and notes that the green transition is now inevitable.
Recently, it has been repeated many times that the housing problem has become pan-European. First of all, we would like your assessment of the reasons that have led such different markets, such as Cyprus, Greece, Portugal, to face the same problem?
The housing problem has now evolved into a pan-European issue, as the main causes that cause it are common in many member states of the European Union. Insufficient housing supply, rising construction and financing costs, lengthy permitting procedures, increased demand in urban centres, as well as stricter regulatory requirements, create a common context of challenges across Europe.
Although markets such as Cyprus, Greece or Portugal have different characteristics and specificities, they all currently face a structural imbalance between supply and demand.
At the same time, the green transition and inflationary pressures have significantly increased the cost of housing development at the European level, making it even more difficult for citizens to access affordable housing.
As a result of the housing problem, house prices in the EU have increased by up to 60% on average since 2015, with some Member States recording an increase of more than 200%, while rental prices have also continued to rise (data from the European Council's website). As land development entrepreneurs, what solutions do you propose to reduce real estate prices?
The only viable solution to reduce property prices is to increase the supply of housing. Europe needs faster permitting procedures, more land available for residential development, a simpler and more functional regulatory framework, as well as better access to finance for both land developers and homebuyers.
At the same time, public authorities should consider ways to reduce the tax and administrative costs associated with housing production, while it is particularly important to strengthen public-private partnerships.
Affordable housing cannot be achieved when the cost of housing development increases at a faster rate than household incomes.
Huge funds
– A few days ago, the Minister of Interior Constantinos Ioannou, speaking in the context of the Informal Meeting of EU Ministers on Housing, in Nicosia, said, among other things, that about €650 billion of additional investments per year are needed to deal with the growing demand in relation to housing. Do your calculations coincide with this amount? And if so, where will the resources be found to meet these needs?
The amount mentioned by the Minister of the Interior, Konstantinos Ioannou, largely corresponds to the scale of investments currently required at the European level to deal with the housing problem.
The demand for housing continues to grow, while at the same time a large part of the existing building stock needs upgrading and modernization, especially in relation to the goals of green transition and energy efficiency.
In order to be able to mobilise investments of this magnitude, housing needs to be seen as a strategic infrastructure for Europe. This requires a combination of public support, private capital, financial tools from the European Investment Bank, but also national incentives that will encourage the development of new housing.
At the same time, it is particularly important to have long-term financing mechanisms, as well as a stable and predictable regulatory framework that can attract investment and create the right conditions for large-scale projects.
–In Cyprus, has the Government decided to promote the "Affordable Housing" scheme, with the aim of putting properties on the market that will be aimed at middle-class people, and can such a scheme provide a substantial solution? In this regard, what incentives should be given to entrepreneurs to participate in such a scheme?
Affordable housing schemes can be an important part of the solution, provided they are economically viable and can be implemented on a substantial scale. Land developers are ready to contribute to this effort, but the success of such projects requires the creation of the right conditions and incentives. Among other things, the acceleration of licensing procedures, the provision of tax incentives, the possibility of increased building coefficients where this is feasible in urban planning, access to more affordable financing, as well as the use of public land for housing development are particularly important.
At the same time, cooperation between the state, banks and the private sector is key so that affordable housing projects can be implemented in a sustainable way and on a larger scale.
The weight of energy
– In addition to the above, there is the big issue of energy, which increases the cost throughout the construction industry chain and as a result the final price of the property. Do you think there is a solution in this part? As entrepreneurs, how do you deal with this situation?
The cost of energy continues to be one of the biggest challenges for the construction sector, as it affects the entire production chain, from building materials and transport to the overall cost of implementing projects.
Land developers are trying to respond to this reality through the use of new technologies, the promotion of digitalization, the implementation of more energy-efficient construction methods and the greater use of sustainable and innovative materials.
However, there is a need for long-term solutions. More stable energy markets are needed, as well as policies that strengthen the competitiveness of European industry. If energy costs remain at such high levels, the effort for more affordable housing will continue to face significant difficulties.
– The issue of the green transition is emerging more and more often in various forms of daily and professional life. How do you perceive this issue in your own profession?
The green transition is now inevitable and is one of the most important changes that the real estate and construction sector is called upon to manage. Land developers fully support the objectives of protecting the environment, reducing emissions and creating more sustainable and energy-efficient buildings.
We are already seeing that new projects are incorporating more and more technologies and practices related to energy efficiency, digitalization, smart systems and sustainability in general. However, all these requirements significantly increase the cost of construction and development.
The big challenge for European institutions and policymakers is to ensure the right balance between environmental objectives, affordable housing and the possibility of implementing new investments.
Europe must avoid creating additional regulatory burdens and procedures, which may further slow down the development of new housing.
