Housing does not have to be a luxury – Democracy and society

“My home is my castle” – if there is one proverb that holds true at this very moment, it surely is this. The house like a castle that protects against the pandemic. It provides a refuge and a sense of security even in these difficult times which regularly force even developed countries to re-examine the difficult balance between freedom, health and the economy.

Unfortunately, access to private space has become increasingly unequal in Europe. This gap has been exacerbated by the pandemic. A confinement spent on a terrace or in the garden is not the same as a confinement in a building.

Since the end of World War II, a sufficient supply of housing has been a high priority in modern market economies in Europe. But after decades of neoliberalism and a decade of strict austerity, Europe now faces the challenge of how to tackle current housing inequalities.

According to Eurostat, housing costs in the EU increased by 19% between 2010 and 2019. At the same time, average household incomes did not increase to the same extent. As a result, the share of a household budget spent on rent has become much higher.

The growing housing problem in Berlin

Take Berlin, which has long been at the forefront of massive price hikes. In the German capital, the cost of an apartment has risen 208% since 2008. At the moment, there are few issues that mobilize people more than the shortage of housing and rapidly rising costs, at the same time. both in the city center and in the surrounding areas.

After the fall of the Berlin Wall, the city changed steadily throughout the 1990s and became a popular place for creatives with little money but lots of ideas. The commercialization of all areas of life that followed the end of communism, however, destroyed this unique space.

City-owned apartments were sold to private companies and entire neighborhoods were gentrified. Where culture was previously desired and state subsidized, we now see a new mall or Starbucks. “Housing for the Few, McDonalds for All” seems to be the motto of a city that now repeats all the mistakes of New York and London.

According to the report by the German Institute for Economic Research (DIW), during peak periods in Berlin, around 20,000 apartments were advertised on Airbnb.

Cheap air tourism and the Airbnb market are another reason for the housing shortage. According to the report by the German Institute for Economic Research (DIW), during peak periods in Berlin, around 20,000 apartments were advertised on Airbnb. Although this is now regulated, there is still a lack of affordable housing, as 40,000 people move to Berlin each year.

As an emergency brake on the ever increasing rents and the enormous displacements of residents, Berlin responded with a rent ceiling which set upper limits to the authorized rents. It was implemented in November 2020 and 1.5 million tenants benefited from reduced rents. However, in April this year, the Federal Constitutional Court struck down the ceiling as inadmissible.

From now on, a referendum on the socialization of Deutsche Wohnen and other big real estate companies is another more sweeping attempt to stop speculators. The initiative consists of asking the Berlin Senate to draft a law “which regulates the socialization of apartments of private housing companies with more than 3,000 Berlin apartments, and their transfer to an institution governed by public law”. By half-time, 130,000 of the 175,000 signatures required have already been collected.

Housing and globalization

Even the United Nations cannot ignore the issue of housing inequalities. For example, the United Nations special rapporteur on the right to housing, Leilani Farha, accuses the international real estate group Akelius of violating the human right to housing.

“Akelius’ business model, driven by the desire to maximize profits, has created a hostile environment for its tenants through severe deterioration in housing conditions, higher rents and increased risk or threat of eviction.” , she said. She further explained that the modernizations allow Akelius to charge considerably higher rents from existing tenants and new tenants and thus bypass rent regulations.

The new prosperity of certain emerging countries – notably China but also Brazil and India – has also changed the demographics of shareholders in Europe.

In addition to the constant influx of people into cities, the trend towards real estate speculation has been intensified by globalization. The new prosperity of certain emerging countries – notably China but also Brazil and India – has also changed the demographics of shareholders in Europe. More than in the past, real estate has become a safe bet that is no longer limited to local or national investors. In the EU in particular, real estate investment is very safe as interest rates are low and governments are stable by global standards.

Investors from all over the world are attracted. For example, the so-called “golden visa”, which qualifies non-Europeans for a Portuguese passport when they invest at least € 350,000 in real estate in Portugal, is aimed at customers of the new rich.

Can the pandemic be a game-changer?

Beyond these developments of the past decades, we are now entering a new era with opportunities and risks: the Covid-19 pandemic is currently redefining residential life in economically developed countries. The demand for housing outside the metropolitan area has increased due to remote working in Europe and the United States. After all, why live in expensive city centers when culture and gastronomy are no longer present? Instead, you can use your laptop while enjoying nature.

Nevertheless, young people in particular continue to move to cities despite the pandemic. This is why it is important to create living spaces within the city in order to slow the rise in prices. The pandemic has further increased pressure on governments to deal with the housing shortage.

At the same time, the recalibration of work and personal life means that many desks are left empty. This prompted local authorities in major US cities, as well as Singapore and Seoul, to convert unused offices into apartments. South Korea plans to create 114,000 social housing units by buying vacant hotels and offices. In Singapore, plans are underway to redevelop the central business district to include more apartments, shops, restaurants and “indoor farms”.

What is needed is not only new luxury buildings and social housing, but also affordable housing for the middle class. To this end, new creative alliances between investors and planners could offer concepts that are both social and profitable for society and the economy, so that in the future we will no longer look for “ghost apartments” in the city. empty city centers.

Such initiatives aimed at shaping the real estate market in a way that does not endanger social cohesion and trust in social and democratic societies with it, would be the right first step in the post-Covid-19 world. At its core, this vision must include the right to have an affordable roof over your head.

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