Key Points
The 9th CSPF meeting aimed to foster collaborative action to develop practical solutions, addressing issues faced by cities in public finances and housing.
Affordable Housing as a Priority: Housing, particularly affordable and social housing, is a top priority for mayors in European cities. 79% of mayors believe they must balance highquality housing, good energy standards, and quantity. The rising cost of housing, outpacing income growth, has increased affordability concerns, especially for low-income and marginalized populations.
Vienna's Model of Social Housing: Vienna’s approach to affordable housing is a significant focus, with over half of the city's residents living in affordable homes. Vienna's model includes a large share of municipal and subsidized housing, impacting private market prices positively. The city ensures tenant protection through national law, emphasizes social mix, and funds its housing system through taxes. Rent levels are fixed and adjusted to inflation. The city also prioritizes continuous renovation, community engagement, and sustainable mobility in its housing projects.
Challenges in Various European Cities: Cities like Bratislava face a severe housing crisis with a mismatch between income and housing prices. Many cities, especially in Central and Eastern Europe, have limited national support for social housing. Shortages of social housing and rising housing prices are common issues across Europe.
The Role of the EU: While the EU does not have direct authority over housing, it can influence policy through funds like the ERDF and by pushing for better integration of housing into national and local policies. The EU is developing a "Pan-European investment platform" and a new plan to boost the supply of affordable and sustainable housing. Discussions are ongoing regarding the definition of "affordable housing" and creating locally-driven investment plans.
Financial and Investment Mechanisms: The EU's economic governance framework limits public spending on social housing, but there have been calls to adjust these rules. Cohesion funds, like the ERDF, could address housing needs, though local governments often struggle to access them. There is an increasing role for partnerships between cities and private capital in funding new housing projects.
PropTech and Innovation: PropTech solutions are being explored to improve building and neighborhood sustainability. Urban Living Labs are testing scalable solutions with the involvement of local property developers, investors, and startups. PropTech aligns with trends like decarbonization, circular economy, and ESG.
Public-Private Partnerships: The meeting highlighted that combining public and private sector efforts is essential for affordable, sustainable housing. Cities are seeking private investment to support public agendas and innovate local property industries.
The Importance of Data and Collaboration: There is a need to gather qualitative data to better understand housing challenges and the impact of policies. Collaboration and knowledge exchange are crucial for developing effective and sustainable housing solutions.
Global Investment in Housing: The real estate market has become attractive to global investors, which increases pressure on affordable housing. Residential investments are gaining traction as other sectors underperform, with investors shifting focus to residential markets for better returns. Private equity capital is increasingly entering the affordable housing sector.
Balancing Financial Returns and Social Outcomes: There is an emphasis on balancing financial returns and social outcomes in affordable housing investments. Emerging public subsidies, such as cheap debt and energy-efficient construction incentives, help balance the cost-return equation. The "magic triangle" of investment aims to make projects financially viable by balancing returns and realistic rent expectations.
Addressing Homelessness: Some cities have implemented programs to address homelessness. During the COVID-19 pandemic, many cities placed homeless individuals in temporary accommodation.
The Need for Policy Changes: There is a general understanding that policy changes and new funding mechanisms are necessary to address market failures in housing. Cities and governments need to create more attractive conditions for investors in affordable housing.
The Role of Municipalities: Some municipalities are providing subsidies and support for affordable housing projects, while others are exploring innovative approaches like acting as a "townhall" bank to provide mortgages.
Challenges in Public Finance: Public financial management (PFM) systems need improvement to better connect them to policy outcomes. There is a need to refine tools and solutions to overcome PFM bottlenecks, especially in developing countries.