The housing crisis: Perspectives from across Europe

Across Europe, the cost of housing has risen sharply in recent years. Rents have exploded, neighbourhoods gentrified and public spaces privatised. The result: more and more people facing homelessness or precarious living conditions.

What are the root causes of this growing – yet relatively under-reported – crisis? What are the different housing challenges people are facing across European countries? And what can we do to help make sure everyone has the basics: an affordable, decent roof over their heads?

These were some of the questions our panel during DiEM25’s recent livestream ‘Housing is out of control’.

Yanis Varoufakis

“At the very beginning it was feudalism – the whole idea that some very lucky bastards were born into the landed gentry and therefore owned the land. The rest, never owned land and were bonded to the land, owned by the landed gentry, and the landed gentry, courtesy of owning the land effectively collected rent from the peasants who didn’t own the land.

“And that was the basis of feudalism: rent, springing out of land ownership by the very, very few. Now, capitalism was meant to be the major socio-economic revolution that shifted power away from land towards machines, capital, entrepreneurship.

“However, shifting to the post-war era after 1945, the system that was introduced, the Bretton Woods System which tamed capitalism and created 20 years of the steadiest growth with the lowest unemployment, the lowest level of inequality in the history of humanity, in a sense, or at least post feudal humanity, that period was a period when rents truly declined.”

The boom of the 1970s

“In 1971 that system was blown up. And we have a very strange new world.

“So essentially, what happens after 1971 is the common currency that the Bretton Woods System had created because it was a kind of common currency, the Germans had the Deutsche mark, the French had the French franc, the Japanese had the yen, weak Greeks had the drachma and so on.

“But all those currencies were linked to a fixed exchange rate. So it was as if we had more or less, the same system, the same monetary system, the same currency unit.

“So the post 1971 world is one where you’ve got a very imbalanced world whereby the American trade deficit gets bigger and bigger. It provides demand for German, Japanese and later Chinese factories, those produce all the exports that are going to the United States, into Britain, into all the very powerful countries and the profits of the German, the Chinese and the Japanese capitalists accumulate and then are transferred to London, to New York, to California in the form of rents that get invested in real estate.

“Not just real estate, but real estate is a very important place where this tsunami of money, of rents, accumulates.”

COVID-19 impact

“The pandemic gave another opportunity to central banks to print more money in exactly the same way, money that flooded, furthermore, into the same FIRE sector: finance, insurance, real estate.

“Given also that for 14 years, between 2008 and 2022, the end of the pandemic, yet austerity being practiced and imposed upon the many while, at the same time, you had this huge quantity of money going around the circuits of FIRE of finance, insurance and real estate.

“This whole process that began in 2008 was simply going berserk by 2022. At that point, because of the pandemic, you have the disruption of supply chains.

“Ships stopped moving, trains stopped moving, trucks stopped moving, so supply was constrained at the time where there was a lot of money around and that of course, gave rise to inflation.

“Inflation made rents go up even further.

“So we reached the present state whereby the many are impecunious, rents have increased secularly dynamic imbalance of global capitalism. Now, you have a new bout of inflation that is pushing them up further.”

Maja Pelevic

“We cannot talk about [the housing crisis] without not changing the government but I also think that this thing should also in a way said that we cannot change this without changing the system because I think that the housing project is actually not a particular question but it’s more like a question that deals with radical movements like this one.

“Do we have any kind of propositions?

“I have a bit of a utopic vision, I would go a little bit into history just for a second and say that actually Yugoslavia, the Socialist Federal Republic of Yugoslavia that we had here that was dissolved actually had these three very important pillars that it based its a whole system upon and it was: free housing, free health and free education.

“Free housing was actually free in a real kind of way so the workers really got apartments for free which they could use for the rest of their lives and so they did not have to worry about these things.

“I think that today we think about all of these things as complete utopian vision and yet they actually

existed in a country in Europe less than 60 years ago so I think that we should, when we talk about housing, maybe we  should talk about the Yugoslav project of housing.”

Julijana Zita

“MeRA25 in Germany’s program on housing is pretty long and we also have everything in there on things like restricting capital movement so that real estate cannot be bought with money from outside of the EU and that people should live in the city where they own the real estate and so on. So there are many things you can do but you have to have the political willpower.”

Watch the full episode here

MeRA talks E1: How to fix the housing crisis

The matter of rising house prices was also the topic of discussion for the first ever episode of MeRA25 talks.

Federico Dolce

“What we are experiencing here in Italy is that basically a generation is able to invest in a house, their first house and maybe the second and the third because in the past we have low interest rates or in the past very low prices.

“Now, everything’s changed, paying rent or mortgage takes up to thirds of your salary, and therefore we’ve got an entire generation and an entire class of people that can no longer afford it.

“And what used to be perceived as a relatively small problem is now becoming a huge crisis because it’s one of the most physical tools for the oligarchs to spread inequality. Here in Italy, we’ve always had a programme for public housing that is low-funded and way below the European average.”

Johannes Fehr

“Land prices in Germany were at around 8 euros per square metre at the beginning of the 1960s, and in 2020 that reached 200 euros per square metre – and that’s the average of the country. Of course, the cities – Frankfurt, Berlin, Hamburg – are over 1,000 euros per square metre, Munich is over 2,500 euros per square metre.

“So normal people can no longer buy anything in the big cities due to this inequality and because of the prices going up.”

Watch the full episode here

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