Is urban housing becoming a commodity? Reflections on housing financialisation in EU cities

Abstract

There are indications that over the past years investors have been increasingly active on urban housing markets, using housing as a vehicle for wealth and investment, rather than considering it a social good. An increasingly dominant role for investors, financial agents and financial instruments on the housing market, is also known as the financialisation of housing. Assumingly, housing financialisation has negative consequences for housing affordability, driving up prices, and decreasing the affordable housing stock especially for lower and middle classes. To get a better understanding of housing financialisation and its relationship to housing affordability, the Joint Research Centre (JRC), the European Commission's science and knowledge service, conducted an exploratory study on the topic (Van Heerden, Barranco, and Lavalle, 2020).

Urban–rural continuum: an overview of their interactions and territorial disparities

“…There are many factors that encourage or discourage housing affordability (Galster & Lee, 2021). Recent studies also suggest that short‐term tourist accommodation can also drive up house/rental prices, specifically in popular cities (Ayouba et al, 2020; Koster et al, 2021; Marques et al, 2022; van Heerden et al, 2020). The soaring house prices in larger EU cities have put pressure on housing affordability for the lower‐ and middle‐class households and the younger generations especially, increasingly making inner city housing out of reach for many.…”

“…Policies should be directed at keeping the urban housing markets inclusive and accessible to all. A multitude of measures are available, such as the provision of more social housing, rent capping, fiscal discouragement of housing financialization, regulation of tourist rentals and tax breaks or financial stimulus for first‐time buyers/lower/middle‐income households (Andrews et al, 2011; Van Heerden et al, 2020). Simultaneously, policies should aim to keep or make the more peripheral areas attractive places to live, improving provisions and/or facilitating (public) transport to the areas where services and opportunities are clustered.…”

“…While urbanization is expected to continue, an increased appreciation of less densely populated small cities and villages might increasingly be seen in parallel, especially if gaps are reduced, for example, by (EU) investments in services, digital technologies and connectivity (van Heerden et al, 2020). Concerning house prices, housing markets are eminently local, and price levels per square metre can differ more strongly within countries than between, with higher prices mostly found in the urban areas and lower prices, in the peripheries and more rural regions.…”