Northern and Western European countries score better on housing than other European countries
Housing matters because it provides shelter, which is associated with feelings of security and stability. This impacts on citizens’ health and participation in the labour market and in society. In this research, housing outcomes are measured by combining data on dwelling quality, sufficient size and affordability for the household living in it.[1]
Differences within Europe diminished slowly between 2007 and 2012
In 2012, Northern and Western European countries had better housing than other European countries. On average, they had the best scores on quality, size and affordability, which means they suffered few housing problems. The Southern and Central and Eastern European countries had the worst housing outcomes, though there was a good deal of variation between countries.
In 2012, almost all European countries had better scores on housing than in 2007
In 2007 and 2012, Sweden and Norway topped the ranking and Bulgaria, Latvia and Romania were the bottom three countries.
In 2012, almost all European countries had better scores than in 2007 (Figure 1). This is partly in line with economic indicators: average household income increased in all regions. Moreover, regional scores slowly converged over the studied period.
The same results are also found when our analysis considers low-income households only.
In the studied countries, housing issues mostly concerned quality, with 59% of households reporting problems. A further 19% mentioned lack of space and 8% was concerned with affordability.
What influences housing outcomes?
High country scores generally corresponded to high average household incomes (Figure 2). Housing is largely provided by the market and rent contracts and buying and selling are subject to market conditions. Therefore, housing has been called the ‘wobbly pillar’ of the welfare state (Torgerson 1987). With the data at hand, government expenditure was not found to have any measurable influence. Other factors, such as market forces and household characteristics do play important roles.
Housing mainly determined by market and history
The available data do not reveal whether the global financial crisis had serious effects. This may be because most incomes were measured in 2011 and the number of households that suffered income reductions was relatively small.
Since the housing stock can serve its purpose over an extended period of time, a country’s performance in the field of housing is likely to be strongly influenced by actions in the past.
In Northern and Western Europe, most households have a financial commitment in the form of rent or mortgage payments as opposed to outright owner-occupiers. Mortgage markets are often not well developed in the Eastern European countries (IMF 2008). More generally, mortgage loans may carry considerable risks (negative equity; Hoekstra et al., 2013).
How housing outcomes are measured…
The composite housing outcome indicator is made up of a combination of objective and subjective data. It gives the percentage of households which, according to the combined indicators for dwelling quality, size and affordability, does not experience housing problems.
The quality indicator is based on several factors, including sanitary facilities in the dwelling, adequate heating and access to public transport, healthcare and other services.
The size indicator experiences a particular issue. The subjective data gathered in the study (people’s opinion on the shortage of space in their dwelling) do only partly correspond to the objective data (using the Eurostat definition of overcrowding). In Central and Eastern Europe for example, the objective data show that 32% of households suffer overcrowding. This is much higher than in the other studied regions. The objective indicator is a reflection of the European divide. The subjective data show that only 15% of households in Central and Eastern Europe actually experience overcrowding, suggesting that opinions are influenced by the actual situation of the housing market (Sunega 2014).
The affordability indicator is based on two financial figures: mortgage and rent arrears and housing expenses in relation to income. Country-specific income benchmarks were developed using data from households reporting great difficulty in making ends meet.
… and what the results may mean
The composite housing outcome indicator developed in this study is reliable and concrete. It correlates with the indicators of quality, size and affordability.
All forms of housing tenure have advantages and disadvantages for households
Housing outcomes correlate strongly with income levels. As all forms of housing tenure have advantages and disadvantages for households, no single one can be put forward as that which minimises housing problems. Large social rental sectors, which generally provide affordable housing with long-term tenancy security, usually need public investment and are expensive items on government budgets. Large market shares of owner-occupation often go hand in hand with tax advantages, but private rental sectors often cannot count on public aid. A wide range of forms of tenure might be the best way to deliver the desired housing solutions for many households. Detailed results can be found in Chapter 5 of Public sector achievement in 36 countries (2015).
Figure 1 shows the composite housing indicator index scores for 2007 and 2012. Figure 2 shows the relationship between average equivalised annual disposable income and housing indicator index scores for 2012.
| Country | 2012 | 2007 |
|---|---|---|
| Country | 2012 | 2007 |
| Austria | 0.74 | 0.87 |
| Belgium | 0.69 | 0.19 |
| France | 0.16 | -0.36 |
| Germany | 0.9 | 0.46 |
| Ireland | 1.18 | 0.98 |
| Luxembourg | 1.05 | 0.77 |
| Netherlands | 0.34 | 0 |
| United Kingdom | 0.91 | 0.24 |
| Denmark | 0.88 | 0.7 |
| Finland | 0.58 | 0.44 |
| Norway | 1.21 | 1.68 |
| Sweden | 1.5 | 1.19 |
| Cyprus | -0.78 | -1.47 |
| Italy | -0.68 | -0.91 |
| Portugal | -1.41 | -2.05 |
| Spain | 0.6 | -0.35 |
| Bulgaria | -1.85 | -2.36 |
| Czech Republic | 0.49 | -0.62 |
| Estonia | -0.28 | -1.47 |
| Hungary | -0.51 | -0.89 |
| Latvia | -1.78 | -2.41 |
| Lithuania | -1.07 | -1.69 |
| Poland | -0.27 | -1.49 |
| Romania | -1.75 | -2.24 |
| Slovak Republic | -0.13 | -1 |
| Slovenia | -0.29 | -0.49 |
Notes: Figure 1 shows the average composite housing outcome indicator (index). The 2012 scores are on the vertical axis, while the 2007 scores are on the horizontal axis. The diagonal line separates the countries that improved their score
(located above the line) from the ones that saw their score deteriorate (located below the line).
Source: EU-SILC (2007/2012)
| Country | index | income |
|---|---|---|
| Country | index | income |
| Austria | 0.74 | 24800 |
| Belgium | 0.69 | 21300 |
| France | 0.16 | 24600 |
| Germany | 0.9 | 21400 |
| Ireland | 1.18 | 22000 |
| Luxembourg | 1.05 | 38400 |
| Netherlands | 0.34 | 22600 |
| United Kingdom | 0.91 | 22600 |
| Denmark | 0.88 | 27100 |
| Finland | 0.58 | 24100 |
| Norway | 1.21 | 41100 |
| Sweden | 1.5 | 25200 |
| Cyprus | -0.78 | 21200 |
| Italy | -0.68 | 18700 |
| Portugal | -1.41 | 10600 |
| Spain | 0.6 | 14400 |
| Bulgaria | -1.85 | 3200 |
| Czech Republic | 0.49 | 8600 |
| Estonia | -0.28 | 7000 |
| Hungary | -0.51 | 5300 |
| Latvia | -1.78 | 5300 |
| Lithuania | -1.07 | 4900 |
| Poland | -0.27 | 6200 |
| Romania | -1.75 | 2500 |
| Slovak Republic | -0.13 | 7400 |
| Slovenia | -0.29 | 12700 |
Notes: Figure 2 shows the average composite housing outcome indicator (index) by average equivalised annual disposable household income. The dark grey dotted line represents the regression line of a bivariate regression of the housing index
on the average income.
Source: EU-SILC (2007/2012)