The COVID-19 crisis has made the situation worse, as people face income and job losses. Countries have taken exceptional steps to help people stay in their housing or find housing and shelter during the pandemic. This support has been vital in the short term, but longer-term housing solutions must be found.
Today, as some countries begin to transition into a recovery – and others continue to fight the spread of the virus – it is more vital than ever to make housing sustainable, inclusive and efficient. The OECD Housing Project is helping countries to do exactly that, providing data, policy analysis and recommendations, and more.
Housing and the COVID-19 crisis
The COVID-19 crisis has compounded the difficulties that people across the OECD may face in finding and keeping good quality, affordable housing. The situation has been especially acute for households with low or unstable incomes.
Countries have helped tenants and mortgage holders by freezing evictions and allowing automatic extensions of rental contracts, by suspending rent and mortgage payments, and by creating emergency homeless shelters. Tax authorities have also introduced mortgage payment deferrals or other relief measures.
This support has been essential in the short term but longer-term housing solutions must be found. Today, as the pandemic continues, it is more vital than ever to make housing sustainable, inclusive and efficient.
People spend more on housing than almost anything else
Even before the COVID-19 crisis, housing prices had increased dramatically in OECD countries over the past decade, especially for renters, and the supply of affordable housing has failed to meet demand.
People in OECD countries now spend, on average, nearly 22% of their disposable income on housing costs. Nearly 1 in 3 low-income renters spend over 40% of their income on housing, limiting what resources they have available for other basic essentials, such as food, health care and education.
Finding affordable housing is also a growing challenge for young people, families with children and seniors.
Homes are the main asset of middle-class households
Homeownership
rates average around 60% across the OECD and makes up about 50% of OECD households' total assets, ranging from around 70% in the Slovak Republic to around 25% in Germany. It is the primary form of wealth for lower- and middle-income households.
Rising house prices make it more difficult for people to get on the property ladder, affecting the ability of lower and middle-income families to accumulate wealth and to pass it on to future generations.
In countries with a higher level of homeownership, wealth inequality is often lower. However, promoting and supporting home ownership may be one way to reduce inequality as well as to foster spillover benefits such as better outcomes for children and higher civic engagement.
Housing bubbles have been at the root of many financial crises
Housing markets are a large part of our economies and strongly influence countries' exposure to economic crises as well as their capacity to recover from them. In 2007-08, for example, housing prices collapsed in many countries, marking the start of what would become a global financial crisis.
Changes in house prices, rents and mortgage interest rates can affect households' income and wealth, as well as how much money they spend and on what. A big drop in house prices can also have a sizeable impact on investment in housing, to the detriment of the economy as a whole: countries with sharper declines in residential investment in the aftermath of the global financial crisis generally needed more time to recover and regain their pre-crisis levels of real GDP.
Housing costs and policies can also shape the economy through their impact on where people chose to live, work and study, as well as their ability to move or change jobs.
The right policies can make housing green and sustainable
Any residential structure affects the environment in multiple ways. It requires land and its construction materials may have a considerable environmental footprint. Building and maintaining housing require energy, as does transport.
In the OECD, most people live in towns and cities. But high housing costs in cities are driving some people out to their periphery, where land and housing are more affordable.
Such urban sprawl has a price. Rural areas may lose agricultural land to new housing, also affecting fragile ecosystems. People may have less access to public services and transport, as well as longer commutes to work by car.
To make cities sustainable and inclusive, governments must boost the supply of affordable, environmentally-friendly housing within them, providing sufficient green space, safe transport and good amenities.
The COVID-19 crisis has made the situation worse, as people face income and job losses. Countries have t
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