JLL
2024
The report "European Affordable Housing: Investment Potential," published by JLL, analyzes the affordable housing landscape across Europe, emphasizing its variability among countries. With approximately 26.4 million affordable homes in the UK and EU, accounting for about 11% of households, the sector's share has decreased over the past decade. The report highlights the importance of government support, such as regulations requiring a percentage of affordable housing in new developments and various forms of funding and subsidies. Unmet demand is growing due to rising rents outpacing wages, particularly in the private rental sector. Despite these challenges, investment opportunities exist, especially in markets with strong government incentives and private sector involvement, particularly in intermediate tenures for low-to-middle-income households. The report calls for innovative investment strategies to address affordability issues while leveraging partnerships for growth in the sector.
Context and Publication Details
The document titled "European Affordable Housing: Investment Potential" is a research report published by JLL in November 2024. It provides an in-depth analysis of the affordable housing landscape across Europe, focusing on the sector's size, government support, unmet demand, and investment opportunities.
Key Findings
Affordable Housing Landscape
- Variability Across Europe: Affordable housing varies significantly across European countries. For example, Vienna has a high proportion of municipal housing, while Berlin and Stockholm rely more on regulated private rentals. In the UK and Finland, home ownership is more prevalent, with government support for first-time buyers.
- Definition of Affordability: Most governments define affordability as spending no more than 30-35% of income on housing. However, there is no uniform legal definition for affordable housing across Europe.
- Types of Affordable Housing: The sector includes social rented homes, low-rent options, and intermediate tenures. Some countries offer part-rent, part-own schemes.
Size of the Sector
- Current Stock: There are approximately 26.4 million affordable homes in the UK and EU, accounting for about 11% of all households. This share has decreased from 12% over the past decade.
- Country Variations: The Netherlands has the highest share of affordable housing at 28%, while Southern European countries like Portugal and Spain have much lower shares, at 2% and 3%, respectively.
Government Support and New Supply
- Regulations and Incentives: Many countries require developers to include a percentage of affordable housing in new projects. For instance, the UK and Ireland mandate at least 10% affordable housing in new developments.
- Funding and Subsidies: Governments provide various forms of support, including loans, grants, and tenant subsidies. However, the allocation of these resources varies widely across countries.
Unmet Demand and Affordability Pressures
- Growing Demand: The private rental sector has grown significantly, with rents often outpacing wage increases. This has led to worsening affordability, with many households facing housing cost overburden.
- Rent Regulation: Countries like Germany and Sweden have long-standing rent regulations, while others, such as France and Spain, have recently introduced controls to manage rising rents.
Investment Markets
- Opportunities for Investment: Despite challenges, the affordable housing sector presents opportunities for investment, particularly in markets with strong government incentives and partnerships.
- Private Sector Involvement: Private investment is increasingly important, especially in intermediate tenures that cater to low-to-middle-income households.
Conclusion
The report highlights the complex and varied landscape of affordable housing in Europe, with significant unmet demand and affordability challenges. It underscores the need for continued government support and innovative investment strategies to address these issues. Despite the challenges, there are opportunities for growth and investment in the sector, particularly through partnerships and subsidies.