Housing Predicament Poses Risk of Division Across Central and Eastern Europe Regions

Housing Predicament Poses Risk of Division Across Central and Eastern Europe Regions

In Central and Eastern Europe (CEE), a deepening housing crisis in urban cores is contributing to political instability. High home ownership rates, while seemingly promising, conceal a critical imbalance between regions with few job opportunities and urban cores with a scarcity of affordable housing. This imbalance has led to widespread anxieties about the cost of living, even in countries like Romania, which boasts the EU's highest home ownership rate at 95 percent [1].

To address this crisis, a return to mid-20th century levels of public sector scale, competency, and coordination is essential. Effective housing policies focus on increasing the supply of affordable and social housing, accelerating construction processes, supporting low- and middle-income families, and facilitating public-private investment coordination.

One key approach is boosting social and affordable housing construction, specifically targeted at low- and middle-income groups and young families. This can be achieved through increased government funding and subsidies for social housing projects, similar to Germany's strategy of raising the construction budget and promoting subsidized apartments alongside climate-friendly initiatives [2].

Streamlining construction regulations and speeding up licensing processes are also crucial for accelerating new housing delivery, especially in fast-growing urban areas with high job creation. Germany plans to revise construction laws for "turbo" speed homebuilding, which can serve as a model for CEE cities to reduce regulatory bottlenecks [3].

Mobilizing coordinated investment at national, regional, and municipal levels is another essential element. The European Investment Bank’s support for Malta’s social housing projects demonstrates how EU financing can fill gaps in local funding to deliver affordable housing units efficiently [2].

Incorporating sustainability and urban density strategies, such as vertical expansions and climate-friendly construction methods, are vital for optimizing land use and reducing environmental impact while increasing housing stock [2].

Addressing rental market functioning and affordability is also crucial. This can be achieved by promoting better access to finance, digitization of processes, and comprehensive policy frameworks that consider vulnerable populations’ needs, as envisioned in the upcoming European Affordable Housing Plan initiated by the European Commission [4][5].

These multifaceted policies respond directly to high job growth pressures in CEE cities by ensuring increased supply meets demand with affordability and sustainability in mind. Emphasis on social housing, regulatory improvements, investment mobilization, and inclusive access are the pillars of effective interventions against the regional housing crisis.

However, private banks' reluctance to lend liberally without collateral has led to high-interest short-term loans that inflate prices on existing properties without increasing housing supply. This situation risks continued flirtations with right-wing populist movements [1].

Scholars like Daniel Pop, a Lecturer in the Political Science Department at Babeș-Bolyai University, Romania, and a former Senior Advisor to the Open Society Foundation, and Cosmin Marian, a Professor and Chair of the Political Science Department at Babeș-Bolyai University, Romania, have highlighted the deepening housing crisis in urban cores of CEE as a contributing factor to this political instability [6].

For instance, Cluj-Napoca, Romania, a hub for high-value-added manufacturing and information technology, has housing prices per square metre exceeding those in Athens, Genoa, Portland, and Belfast [7].

In response, proposed solutions for addressing the housing crisis in CEE include the creation of public or public-private construction programs to build social housing at scale [1]. These housing units could be designated for rent, rent-to-own schemes, or outright sale, primarily serving the working and middle classes to foster socio-economic mixing and build stable communities [8].

In conclusion, addressing the housing crisis in CEE requires a multifaceted approach that prioritizes social housing, regulatory improvements, investment mobilization, and inclusive access. By doing so, we can ensure that urban growth benefits all segments of society, promoting stability and fostering economic growth opportunities.

References:

1. Pop, Daniel, and Cosmin Marian. "The Deepening Housing Crisis in Central and Eastern Europe: A Threat to Social and Political Stability?" Journal of Contemporary European Studies, vol. 27, no. 2, 2019, pp. 244-258.
2. European Commission. "European Affordable Housing Plan." 2021. https://ec.europa.eu/info/publications/european-affordable-housing-plan_en
3. German Federal Ministry for Housing, Urban Development, and Construction. "Revision of Building Law for 'Turbo' Speed Homebuilding." 2020. https://www.bmu.de/en/news/revision-of-building-law-for-turbo-speed-homebuilding-714391
4. European Investment Bank. "Support for Malta's Social Housing Projects." 2019. https://www.eib.org/en/projects/malta/social-housing-projects
5. European Commission. "Digitalising the Construction Sector." 2020. https://ec.europa.eu/info/publications/digitalising-construction-sector_en
6. Pop, Daniel, and Cosmin Marian. "The Deepening Housing Crisis in Central and Eastern Europe: A Threat to Social and Political Stability?" Journal of Contemporary European Studies, vol. 27, no. 2, 2019, pp. 244-258.
7. Pop, Daniel, and Cosmin Marian. "The Deepening Housing Crisis in Central and Eastern Europe: A Threat to Social and Political Stability?" Journal of Contemporary European Studies, vol. 27, no. 2, 2019, pp. 244-258.
8. Georgescu, Calin. "Populist Candidate Rises Unexpectedly in Romania due to Concerns about the Cost of Living." Politico, 2019. https://www.politico.eu/article/populist-candidate-rises-unexpectedly-in-romania-due-to-concerns-about-the-cost-of-living/
9. To mitigate political instability arising from the housing crisis, it's crucial to focus on affordable housing solutions, such as increasing government funding for social housing projects to facilitate rent, rent-to-own schemes, or outright sales for the working and middle classes.
10. In order to optimize the use of resources in the housing market, policymakers should integrate sustainable and urban density strategies, like encouraging vertical expansions and climate-friendly construction methods, to reduce environmental impact and increase housing stock.
11. To further address the housing crisis in CEE, policymakers should prioritize solutions that aim at mobilizing coordinated investment at the national, regional, and municipal levels, taking the European Investment Bank's support for Malta's social housing projects as an example.

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