Ukraine's refugees highlight the shameful EU housing crisis

Giles Merritt says refugees from war-torn Ukraine are placing fresh strains on housing shortages in Europe that have long been shamefully ignored.

When five million Ukrainians fled Putin’s invading army last year, they were welcomed around Europe with open arms. But with no end to the war in sight, the worry is this hospitality may fray and lead to ‘Ukraine fatigue’. The core problem is housing; although many Ukrainian women and children are sheltered privately, others have had to be placed by public authorities in scarce social housing.

Europe’s chronic shortage of affordable homes is turning into a full-blown crisis. Between 1960 and 2015, Europe’s population exploded by 25 per cent to half a billion, yet house building halved. There hasn’t been enough housing for decades, and runaway property prices are the most visible and undesirable symptom of this.

For all the heartfelt sympathy that greeted the Ukrainian newcomers a year ago, their arrival has been the proverbial straw to break the camel’s back. Providing shelter for the refugees has mopped up almost two-thirds of the €30 billion that the influx cost EU governments in 2022. The indefinite nature of their stay makes it especially hard to manage and expensive.

Some commentators believe the Kremlin deliberately ‘weaponised’ the refugee flow to increase pressure on Kyiv’s allies. While that may well be true, there’s a silver lining to the cloud. It may yet prompt a concerted response by policymakers to an EU-wide problem that has been deteriorating steadily for at least three decades.

The scale of Europe’s housing crisis is huge. The OECD described the arrival last year of the Ukrainian refugees as “a major challenge in the context of significant pre-existing housing challenges. The European Investment Bank believes social housing in the EU needs to be increased by a massive 25 per cent, which would translate into a long-term multi-annual investment programme with a yearly price tag of €27 billion.

That would increase the EIB’s lending by around an extra one-third, although it would arguably be money well spent. For a start, it would ease the plight of the ‘working poor’. Housing Europe Observatory, a Brussels-based NGO, reckons that nearly a third of the 220 million households in the EU “are overburdened by housing costs.” The Council of Europe Development Bank has echoed that, saying that the high costs of even modest homes penalise 150 million people and are “an excessive burden” on a third of low earners.

Tackling the degrading living conditions and unaffordable rents created by the slowdown in home construction since the 1980s would narrow the wealth gap that’s an increasingly toxic political factor. Researchers at the European University Institute say home building could counter populism because they see a direct link between bad housing conditions and voters’ support for extremists.

The European Construction Industry Association has been lobbying for an EU policy framework to kickstart a concerted drive on new homes and the modernisation of older ones. Another body, the Construction 2050 Alliance, which groups some fifty members, is also urging EU governments to act more boldly.

These voices demanding a massive housing drive also point out that as well as addressing social deprivation, it would spur post-pandemic recovery and be an important element in the fight against climate change.

The World Bank has issued a practical three-point guide to ways that governments could stimulate construction. First, earmark available public land. Second, develop transport links between new housing and areas that host factories and office jobs. Third, ensure total price transparency through public registries for all property transactions.

The European Commission could certainly endorse these suggestions, and even build on them. Housing will never be one of its competences, but the EU nevertheless has a strong interest in encouraging a blitz on home construction. Younger people’s difficulties in finding affordable housing to buy or rent is depressing birth rates across Europe. The demographic crisis, in which fewer taxpaying workers will have to pay for many more pensioners, could be softened or possibly averted if better housing were to boost the EU’s average birth rate of only 1.5 children per couple to 2.5 or even 3.0.

More homes would also mean greater mobility. Labour shortages that are braking economic growth would be reduced if people were able to move to where there are jobs. This applies not just to indigenous Europeans but also to badly needed economic migrants. Demographic change is the new reality, so it’s high time policymakers in Europe looked at the ‘Big Picture’ of housing as a key to employment, economic growth and a sound tax base.

The views expressed in this Frankly Speaking op-ed reflect those of the author and not of Friends of Europe.

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