The housing crisis is a global problem (but there are those who fare better)

The housing crisis is a global problem (but there are those who fare better)

Angharad Paget-Jones, a 28-year-old from Port Talbot, Wales, doesn't believe she'll ever be able to buy a house. Despite what the money-saving tips and guides on the internet say, "it's not enough to stop drinking coffee in the morning or cancel your Netflix subscription," she says. Paget-Jones, however, needs her own home to live in. She is a person with disabilities, and she is in dire need of adapting her home to improve the quality of her life, which she cannot do in a rented house.

“My goal is to become the owner of a home, ”he explains. But despite working full-time, she hasn't been able to save enough money to get close to the amount required for the down payment. The average price of the houses you looked at is around 180,000 pounds (around 215,000 euros at current exchange rates). She currently has around £ 3,000 (just over £ 3,500) in savings, while her rent amounts to £ 675 a month (just over £ 800). She manages to save around £ 200 a month, but the rising cost of living has taken a toll on her: "I save a lot more than most people, but with everything else going up it is not possible to save more. and being able to pay for heating and eat at the same time, "he says.

A global problem The Paget-Jones situation is far from being an exception. In the United States, house prices are 4.4 times higher than average net income, the highest level since 2006. In England and Wales they are now 8.9 times higher, compared to 6.7 times a decade ago. According to a survey by Tecnocasa, in Italy it takes on average almost seven years' salary to buy a house in big cities. Canada is considering prohibiting foreigners from buying houses in the country after the average price has reached nine times the average income of families. The housing market is not working, and more and more people are condemned to an endless rental cycle because they can't afford to buy a house.

WiredLeaks, how to send us an anonymous report The problem is exacerbated by the fact that, after years of low interest rates, those who have the economic means to invest focus on real estate rather than bank accounts, forcing the rest of the people to spend their income on rents instead of saving to buy a house.

"The the fact that global interest rates are quite low has helped increase house prices around the world, ”explains Dan Wilson Craw, deputy director of Generation Rent, a British lobbying group focused on tenant rights.

"The house is no longer a house - agrees Richard Ronald, professor of housing policies and director of the political and economic geography group at the University of Amsterdam -. It is an asset of inve pension, a pension ".

This is a problem recognized by countries around the world, which many are trying to remedy:" There is a rather broad consensus that the balance between demand and supply is very, very unbalanced, ”says Remy Raisner, founder of New York-based real estate investment firm Raisner Group and co-author of a World Economic Forum report on the global housing crisis. In the United States, for example, about three million fewer homes have been built in each decade of this century than would have been needed. The Japanese model Some suggest that Japan is the model to follow. In the country, rental prices have remained largely stable over the past twenty-five years, according to data from the Japanese statistics office. The reason is that the government controls zoning nationwide and is more open to increasing the number of homes it allows for construction. Just over a third of Japanese citizens live on rent and are protected by a 1991 law that makes it difficult for landlords to terminate a lease or prevent a tenant from extending it.

All of this does yes that Japanese citizens are in third place among the countries of the Organization for Economic Cooperation and Development (OECD) in the availability of good quality housing at affordable prices, with a gap of more than ten percentage points from the United States and twenty percentage points from Canada. Italy is in sixteenth place in this ranking, just above the average of the European Union and that of the OECD.

"A unique aspect in Japan is the authorization process, which leads to obtaining a permit construction is less uncertain than in other countries, ”says Jiro Yoshida, an associate professor of economics at Pennsylvania State University's Smeal College of Business. It's a completely different situation than in the United States, for example, where planning leaders at the local level can bend and adapt the rules to their whims. "The negotiation in the United States is very uncertain and not at all obvious, to the point that each area has its own lawyers who specialize in the authorization process," adds Yoshida.

Wilson Craw is in favor of extending the Japanese system elsewhere : "I think there's no reason why we can't have a Japanese-style housing system," he says. But since no politician wants to be blamed for lowering real estate prices for fear of alienating voters with their own home, this system is unlikely to be adopted. Since building new housing estates in particularly compact communities can be politically disadvantageous, politicians have been dissuaded from speeding up the construction of new homes.

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Arrow The US government recently acknowledged that the country's home construction rate hasn't kept pace with the population for more than 40 years , and that the homes being built are too large and expensive for first-time buyers. The share of new homes under 130 square meters built in the country has dropped by more than eighty percent compared to the 1970s. Instead of housing, land is being used for golf courses, popular with older voters and more inclined to vote. But not everyone thinks Japan's real estate market is as rosy as it looks. Although rents have remained mostly stable, the price for the purchase of a property has also increased in Japan as elsewhere: "The Japanese system is absolutely no better", says Ronald, who has lived between Japan and the Netherlands.

"[the house price, ed.] is simply not inflated too much, since there are fewer Japanese people in the world but the same amount of houses compared to when we started this phone call." . The aging of the Japanese population helps explain the country's relative success in the eyes of outsiders. "In Japan they have done nothing special with housing policies, but rather have had a very damaging inflation of house prices - continues Ronald -. There is nothing particularly remarkable in Japanese housing policy". Furthermore, the country's achievements would be difficult to imitate elsewhere. "We are talking about a country that was, for better or for worse, almost completely rebuilt after the Second World War - explains Raisne -. It will be difficult to replicate this model in places that have not had the same amount of history, so to speak".

The cases of Singapore and Germany If not the Japanese one, then, what model should we look to to repair the inefficient real estate market widespread in a large part of the West? One option is Singapore, where public housing is built in purpose-built communities and leased with a 99-year below-market lease. The sale of these properties is severely restricted to reduce speculation, but is still allowed after five years of ownership. In Singapore, nearly four out of five citizens live in public housing, according to official statistics. "Prices can never exceed the income of normal working families - says Ronald -. They have created this virtuous circle, which leads us to reflect on the role of housing regulation".

In Europe, another a valid alternative is the system implemented by Germany.

"Germany's model is a bit too extreme and unique, in the sense that they have a lot of public housing but rented living is the norm," explains Yoshida. The country has the second lowest percentage of homeowners in the entire OECD. In Germany, buying a house to live in is not necessarily the ultimate goal: "In Germany they are renting and buying a house as an investment," adds Yoshida.

Tenants' rights in the country have become the focus of a campaign called DW und Co. enteignen - literally, expropriate Deutsche Wohnen (a German real estate company) and Co. - which seeks to take 250,000 properties out of the hands of private owners to become public property, guaranteeing fairer prices for tenants and greater chances of house appears.

House purchases in Germany are increasing along with prices. The fact that, after the pandemic, the Germans started to consider having a roof over their head as an extra security has raised prices, but this has not impacted many people, in terms of experience in the market. . "Renters have secure long-term contracts and can decorate and invest in their homes, imagining spending their entire lives having children and raising them in rented accommodation," says Ronald.

Until the end of January 2022 , in Germany residential complexes were subsidized by the government, with rates below market rates for the first five years after construction: "This means that every year tens of thousands of units arrive on the market, keeping rents lower and preventing the rush to buy a property ", explains Ronald.

A similar model is also applied in Austria and Switzerland, where the split between renters and homeowners is approximately 55 against 45 per cent (in favor of renting in Switzerland, and ownership in Austria), compared to an average European homeownership rate of seventy per cent. In the Austrian capital, Vienna, homeowners are known seven percent.

"German and Swiss housing policies provide subsidies to ensure a steady influx of low-cost rental housing into the system," says Ronald.

The 'Central Europe has some problems, but in general the countries that have managed to make their real estate market work better are those that encourage low rents or easy systems to buy a house, dissuading those looking to invest in real estate as the only source of income. "There is no reason why we cannot do it too [the rest of the world, ed.] - explains Wilson Craw -. But, in practice, to get to where we are at that point it is necessary to reflect on what barriers the political system presents. ".

This article originally appeared on UK.

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