Assessing European housing solutions

There is much room for improvement in the housing sector in Malta. Perhaps one way to consider the necessary improvements for the Maltese situation is to look at how housing policies have been developed in other countries.

In view of this, I have lately read several reports and other documents dealing with housing aspects in European countries. It is worthwhile to view our local housing problems within the context of international ones and, while not forgetting our particular characteristics, assess the solutions adopted by these countries.

In most industrialised European countries, housing policies developed to a large extent after the war, particularly in the 1960s and 1970s. Since that date, these countries have revised, or even restructured, their housing policies to reflect current housing conditions.

The coming on of the 21st century seems to have set the stage for a general re-examination and rethinking of the policies in place, aimed at modernising them and integrating them into overall policies, namely in the context of sustainable development.

Housing ministers around Europe have been concerned with such housing issues as improving access to the housing market for low-income earners, implementing urban restructuring and understanding the ongoing changes in social housing.

These issues are common on the continent due to the similar situations in European countries. In fact, most of these countries are undergoing the same demographic development: low population growth, progressive aging of the population and a general decrease in the average household size.

Most of these countries have also undergone building booms since the 1960s that has drastically changed the line of thought underpinning housing policy ever since. Since Malta, too, has experienced similar conditions, a study of the housing policies currently being implemented in Europe will help us to understand our national policy for housing and seek methodologies to improve it for the benefit of the ordinary citizen.

Several housing aspects can be analysed in a European perspective and then compared to the situation in our country. While allowing for certain peculiarities, such as market size, we have common conditions, and we may therefore design our future housing policies on parallel lines with those in European countries.

Improving access to housing market

One of the most important aspects of housing policy is to improve access to the housing market for the man in the street. Several problems such as skyrocketing property prices and rents, as well as deteriorating conditions in urban centres, among others, pose problems to first-time buyers and young people in fulfilling their right to affordable and adequate housing.

These problems characterise the housing scene in several European countries even though particular circumstances vary from one country to another and even among different regions in the same country.

Ireland, for example, experiences an overall shortage of housing, even though housing constructions has doubled since 1993. Demand for housing has risen substantially, especially in the Greater Dublin area and is forecast to remain at a high level.

This demand is underpinned by a rising population, reduction in household size, immigration, high economic growth, rising employment and disposable incomes coupled with falling unemployment and low mortgage interest rates.

Ireland's present housing stock of 324 houses per 1,000 population is unlikely to satisfy the present housing demand in the country. In fact, while the Irish government originally set a target in 1999 for the annual provision of 50,000 new housing units (13.3 dwellings per 1,000 population) for the subsequent ten years, this figure has since been revised to 60,000 units (16 dwellings per 1,000 population) until 2005.*

Ireland also faces a housing affordability problem in view of the dramatic rise in housing prices in recent years.

Measures have been introduced to assist prospective first-time buyers to gain a foothold in the housing market, particularly through the withdrawal of investor incentives (as investors were crowding out first-time purchasers), reduced stamp duty rates on property transfers and the introduction of a local authority affordable housing scheme whereby local authorities provide houses as cost price to low- income buyers.

Access to the housing market in Finland is also restrained, mainly due to rapid rise in house prices and higher rents, particularly in the Helsinki metropolitan area and other growth centres. The rise in house prices has hindered the fulfillment of target set for the control of inflation and also endangered the realisation of many important housing policy objectives.

These problems have resulted in the deterioration of the position of first-time buyers and young people in general as well as a tightening of the housing market, leading to increasing numbers of homeless.

The rapid rise in house prices also makes difficult the production of reasonably priced social rental housing and the provision of life cycle economical housing suitable for, among others, older people.

In Sweden, the last seven or eight years have been subject to a considerably low level of new housing production. A recent analysis has revealed a great need of new housing in the expanding areas of the country.

In these growth areas, especially in the Stockholm region, the initial stages of a housing shortage have become apparent. It is to be feared that this shortage will lead to overheating and capacity problems on the housing and construction market.

In the coming years, difficulties can be expected when more people than previously anticipated seek to move to these areas. This scenario will place the continued economic progress of the growth areas at risk.

There are fears that it may even impose limits on the economic progress of the whole country. In contrast to growth areas, medium-sized and small towns often have a lot of vacant dwellings for rent.

Responsibility for planning and providing access to housing in Sweden falls upon local authorities. However, many local authorities seem to be unaware of this and have failed to develop plans for meeting demand for new housing constructions that may arise. Some local authorities do not even want to have new housing built, in spite of the existing demand.

The Swedish ministry is now working on a proposal for a new law, which will establish a formal obligation for local authorities to provide for making housing available. An obligation for local authorities to run a rental-housing agency when needed is also being discussed.

Swedish housing costs are among the highest in Europe, calculated as a share of disposable income. The average household spends around 30 per cent of its disposable income to live in rented accommodation. One goal for the government is to bring this share down. This goal can be achieved either by lowering housing costs or by increasing households' disposable incomes.

Much of the housing policy debate today focuses on the question of how to bring housing-construction costs down and on possible chances in the tax on real estate. An official report about the construction market and construction costs has recently been presented.

The report has been produced by a commission which has been working in close co-operation with actors from the constructions sector towards the long-term goal of reducing construction and maintenance costs. Real estates taxes are also important to housing costs. Another commission has recently proposed changes in the Swedish real estate tax system.

Access to the housing market in Malta may be hindered by the relatively high prices compared to average wages. Coupled with the absence of a rental market, this prevents low-income earners from buying a house.

Urban restructuring and sustainable cities

Government should address this problem through practical housing schemes which provide subsidies prices to low-income earners, or through a public-private relationship in the housing sector.

For example, the private sector should be encouraged to repair property with subsidies from the government.

However, then, in view of the subventions given, the private entrepreneur would be obliged to sell the repaired property to targeted low-income households.

This would provide adequate social housing to low-income earners and also boost the construction industry which is often the motor of the economy. At the same time, it will help reduce the number of properties in need of repair.

Urbanisation has significantly taken its toll in many countries since the 1960s. Cities have become more densely populated, often becoming home to people from different nationalities.

Housing is obviously dynamic and hence there is a need for the increased urbanisation of the Sixties to be reshaped in line with the realities of the present. In response to this, housing policies in various countries have now been focused on housing issues such as urban renewal, urban restructuring and urban development.

A case in point is Germany, which has formulated a "social city" programme to stabilise neighbourhoods that have become increasingly run-down as a result of social, economic and urban development problems.

These neighbourhoods involve housing estates with a lopsided social structure, high levels of unemployment, a frequently poorly integrated foreign population and a low standard of housing situated usually in an unattractive neighbourhood environment.

This results in vandalism, conflicts between residents and a higher crime rate. Carrying out housing and urban developments policy measures alone is not sufficient to stabilise these neighbourhood.

The "social city" programme therefore aims to combine a variety of sectoral policies such as measures to improve housing conditions with a view to re-establishing a better social mix, improve the neighbourhood environment and the quality of urban development, provide a stimulus to employment by strengthening the local economy and using labour market policy instruments, improve infrastructure facilities and enhance safety in the public realm.

In Ireland, an Area Regeneration Programme was designed to up-grade the high density older housing complexes (mainly flats at various locations around the city) and is linked to the development of strong estate management programme to overcome chronic social problems associated with apartment complexes.

In France, much effort is being directed towards the renewal of depressed social housing neighbourhoods built from the 1950s to the 1970s, particularly through intense demolition or reconstruction programmes. The objectives of the law on urban solidarity and renewal are mainly solidarity and sharing and sustainable development in the cities.

The law seeks to undertake urban renewal, to encourage areas promoting exchanges and a mix of people, to ensure a social mix in safer cities, thanks to different types of housing in neighbourhoods, communities and built-up areas, while reinforcing the link between territories and rural territories.

This is less about fighting urban spread than urban explosion.

At the same time, the law addressed the fact that cities can no longer be solely designed for the car and around the car. Priority must be given to other methods of transport (bicycles, pedestrians, collective urban transport, etc).

Cities must be developed by respecting the territories around them, to save and find a balance with the surrounding rural areas. Finally, they must be concerned about urban ecology (management of waste, rare resources, nature areas and parks.)

As in other countries, Malta has witnessed rapid urbanisation since the 1960s. This is evident from the fact that while population and household growth grew at a slow rate over the last 40 years, the number of housing units being provided and the land area being taken up for development grew at a higher rate.

This lack of correlation between population and household growth to the growth in dwelling units indicated a steady process in urbanisation. In fact, the traditional Maltese life depicted by rural villages surrounded by fields has almost vanished.

Government housing estates built on the periphery of most towns has nearly merged towns into each other (Fgura, Paola and Tarxien) while some coastal areas are no longer restricted to summer residencies but have been developed into permanent residential settlements (such as Sliema and Marsascala).

Any serious outlook on urbanisation in Malta should consider the patterns of such urbanisation. It seems that the population is shifting away from localities in the Grand Harbour area (Valletta, Floriana, such as Hamrun, Marsa and the Three Cities) towards less densely populated areas such as Attard, Naxxar, Mosta, Marsascala and Birzebbuga.

While this trend is not wrong in itself, it empties a number of properties in some towns and villages which may be utilised for meeting further housing demands.

Indeed, urban restructuring of towns such as Valletta and Floriana may be required to avoid a higher loss of population in these areas.

* Regular national reports on changes made to housing policies in European countries