Possible effects of the COVID-19 pandemic on our housing markets

By Peter Boelhouwer – Chair ENHR //

The most serious effect of the COVID-19 pandemic on national housing markets is, without any doubt, the growing awareness of the need for adequate living and working conditions in our homes. This will have an impact on several related issues. First, it means that healthy family life and good conditions for working from home require houses to be more spacious, and preferably be surrounded by green and sustainable environments. A second effect is people’s willingness to spend a larger part of their income on housing. Thirdly, the way we use our homes and even the way we live in our everyday environment might change. I need to stress that these are not only positive effects. Domestic violence, especially during lockdowns, will probably increase due to the pandemic too. Health issues and conflicts in public space can also be expected to increase.

Even before the COVID-19 outbreak, there were signs in some industrialised countries that more households than usual were thinking of leaving the cities. Take the Netherlands, for example. After the recovery of the housing market in the Netherlands in 2014, the internal migration figure in Amsterdam was negative. The growth of the city was caused entirely by foreign migration. Since the pandemic, the city has experienced a drop in population, more specifically families with young children. Research outcomes suggest that this out-migration can be explained by a lack of affordable housing in the cities and/or the attractiveness of suburban environments. Figures also show that during the pandemic in the Netherlands an extra 15% to 20% of home seekers are especially interested in housing that includes outdoor spaces and gardens located in a suburban environment.

More and more people are working from home and experience the convenience of a separate workspace and outdoor space for relaxation. Many large companies have already indicated that after the pandemic working from home will be the standard. This opens up possibilities for urban households to move to a more desired environment, further away from their office location.
Another effect of the COVID-19 pandemic, especially in the short term, are growing unemployment rates, resulting in income drops for many households. This means that the demand for affordable and social housing will grow. In many countries, waiting lists for social housing have already grown in the past few years, and will continue to do so in the near future.
Moreover, because of the COVID-19 crisis, in the private housing market, investments in multiple properties (i.e. additional houses for the purpose of residential lettings, tourist accommodation, or holiday homes) are decreasing. COVID-19 might put an end to the growth of private and institutional investments alike; on the supply side it appears that mortgage lending by banks for (further) property investments has come under more scrutiny, while increasing unemployment rates and income drops on the demand side increase the risk of rent arrears and rising vacancy rates.

What effects can be proven?
In most countries, the COVID-19 pandemic has not greatly affected the housing markets. This is remarkable when compared to how housing markets reacted during the 2008 General Financial Crisis (GFC): a big recession versus almost no effects until now. This can be explained by the following facts: the housing markets (and more particularly the mortgage market in the US) were responsible for the GFC, whereas the COVID-19 pandemic has until now, thanks to massive government support for the economy, infected the life and work of most European households to a lesser degree. In the Netherlands for instance, the foreclosure rate of companies in the last eight months was lower than in 2019. Unemployment rates are only rising moderately and some industries, like convenience stores, care, hardware stores and delivery stores are even booming.

Although some banks and scholars predicted house price declines during the coronavirus outbreak, in most European countries demand did not drop dramatically but instead increased. In the Netherlands it is still increasing by between 6-8% and even 11% in Q3 of 2020.
Many of the larger households of which one or both partners now work from home to a greater of lesser degree are confronted with a lack of space, especially when schools are closed. In some cases, this leads to stress and even psychological problems. Especially poor families with less desirable housing conditions are suffering from a lack of space. This can even have effects on the school performance of their children. Home education during the lockdowns has put children from low-income families in less favourable housing conditions at a disadvantage. Educational professionals expect that these educational arrears will be difficult to make up and could have a lasting effect on these underprivileged children.

Lessons for the future
The COVID-19 crisis clearly shows us that decent housing is an absolute prerequisite for the well-being of households. It also shows that housing is related to an array of external effects. People’s health, school performance, work performance, general welfare and mental well-being are all closely connected to adequate housing. Against this background, government politics should not keep low and middle-income households dependent on a market that fails to deliver, as is now the case in many urban areas in Europe. National governments should act adequately when the market does not deliver as it should. Governments could instead cooperate with intermediate and socially inclined housing providers to achieve this goal.
Against this background, housing issues will probably assume an increasingly dominant place on the political agenda in the near future. Housing has already become one of the most important social issues of our time. From this perspective, COVID-19 can become a game changer for our European and national housing systems, embedding them in a welfare system that is less dominated by neo-liberal principles, but instead based on growing government responsibility and influence, and a more empowered social/collective rental sector.

A joint reflection on coronavirus and housing

By Claire Carriou, Jaana Nevalainen and Kath Scanlon – ENHR’s Coordination Committee members //

This is a joint reflection on coronavirus and housing. There has been little research published about the implications of the pandemic – it is still too soon – and it can be hard to keep track of what is going on in other countries when there is so much happening in one’s own. The following observations highlight a few of the main issues as seen from our homes in France (Claire Carriou), Finland (Jaana Nevalainen) and the UK (Kath Scanlon).

What we look for in a home
All ENHR members understand the importance of housing, but this year’s Covid-19 pandemic has demonstrated to everyone how vital our homes are for our wellbeing. Home schooling, lockdowns, working from home and quarantines have isolated us, shaken our social lives and everyday routines and made our homes literally the centres of our lives. This has led many to look for larger dwellings with access to private gardens or local green space. There is anecdotal evidence of people leaving cities for more rural areas with reasonable prices and easier access to nature. Some have even transitioned to very remote working, for example from San Francisco to Wyoming, from London to Scotland, from Paris to smaller cities, or even from California’s Silicon Valley to Kontiolahti in Finland, where a North Karelian farm is now home to the head of Facebook’s Public Figure Partnerships division. This flight to suburbia and exurbia is contributing to higher prices in some areas which, combined with higher unemployment and household financial problems, may make home ownership an even more distant dream for many.

Rents and evictions
In England, leases for private rented housing normally last only six months or a year, with the landlord free to evict the tenant at the end of that period without giving a reason. Most other European countries provide much greater tenure security. The massive economic shock of coronavirus led to fears that many private tenants would build up rent arrears and face eviction. The government advises those tenants who have difficulty making rent payments to speak to their landlords, and has encouraged landlords to be flexible. It also introduced a longer, six-month notice period and a ban on evictions. That ban expired in late September and some experts predict a wave of evictions and consequent increase in homelessness.
The crisis has seen the emergence and strengthening of new activist movements, for example in Spain and in France (Bobigny), where there have been calls for a moratorium on social housing rents.

The Basel Accords, the new regulatory framework for banking in Europe, are leading mortgage lenders to tighten borrowing and repayment criteria to reduce risk. A prolonged pandemic situation, combined with the financial challenges of individual households, might lead to an increase in mortgage defaults, evictions, and mortgagee-in-possession sales. This is possible even though the ECB recently has relaxed bank leverage regulation in an attempt to boost the economy, aiming to avoid a pandemic-driven credit crunch in the Eurozone.
The virus has caused difficulties for many borrowers – both owner occupiers and landlords – in meeting their mortgage payments. In Finland repayment-free months or changes of the repayment scheme have given some relief for individual households with mortgages. In the UK, the government required banks to allow both owner-occupiers and landlords to suspend payments temporarily with a ‘mortgage holiday’ of up to three months.

At the start of the UK’s lockdown in March, the government announced an ‘Everyone In’ programme to get rough sleepers off the streets and into some kind of accommodation. What had been regarded as an intractable problem was solved (at least temporarily) in a few days, and in London alone almost 4,000 people were given shelter. The challenge now is finding long-term homes for them and meeting their other support needs. In Finland the effect was less dramatic: the country has had effective homelessness prevention strategies for years and the number of homeless people has declined recently. The coronavirus situation has not changed this as the mechanisms for cooperation between various actors, together with Nordic-style social security and housing allowance systems, had created a buffer against rent arrears caused by financial problems or unemployment and possible housing evictions.

The neighbourhood
The pandemic has shown the importance of the local scale and neighbourhood in everyday experience. In Paris, Nantes, Lyon and Marseille new forms of solidarity between inhabitants have emerged, to help elderly people living alone, to share childcare or to make masks. We have also seen the emergence of new forms of sociability, at the level of the building or the neighbourhood. This trend has spread more widely to supply systems, with the success of local food and other circuits, and the virus has sparked increased interest in the concept of la ville du quart d’heure, in which daily urban necessities are all reachable within 15 minutes on foot or by bike. The pandemic has underlined that sustainable cities must be designed for their residents and their needs, not just for the demands of the asset-based economy.

Demand for Airbnb disappeared almost completely when lockdowns and travel restrictions suppressed tourist flows around the world. Many of these units have since been offered for residential use at much more moderate rents, and some cities regard the current situation as an opportunity to set limits on Airbnb rentals and to increase their housing supply.

Questions for the future
How will the Covid-19 pandemic shape housing? What might the post-Covid reconfiguration of cities mean for housing? Will we see a reduction in demand for city-centre office and retail space or the reshaping of open-plan offices in favour of individual working spaces? Will there be growing interest in central urban open public spaces? Will we move to more sustainable, energy efficient and affordable housing with multifunctioning spacious dwellings? Centrifugal forces may continue to drive people away from the city centres in search of more space, but on the other hand some might want to move closer to city centres so that they can avoid taking public transport. There seems to be a two-way dynamic.
Whatever happens in the future, the current pandemic situation has shown the importance of suitable and affordable housing not just for individuals and households but also for the liveability of cities and access to open public spaces. This is an opportunity for housing researchers to innovate for the post-Covid world.
As members of the ENHR, the Covid experience also forces us to think about new ways to function as a network. How can we continue to build an international scientific community when we can no longer meet physically? While we hope the Covid episode will be short, this situation does confront us with the challenges of climate change, which will be increasingly important in the years to come. We are committed to finding new ways to combine scientific exchange and consideration of ecological issues.

Greater than the sum of its parts: carbon reductions, health and wellbeing in the housing sector

Dr Catalina Turcu – Associate Professor in Sustainable Development and Planning at University College London (UK) //

The housing sector impacts on all spheres of our lives. At the most basic level we are all touched by it as we all have to live somewhere. It plays a significant role not only in climate change mitigation but also in maintaining our physical and mental health, and wider wellbeing. In 2017, the residential sector accounted for some 60% of total carbon emissions in the building sector, which made for 28% carbon emissions globally, with main energy demand attributed to space and water heating (34% and 19%) and cooking (20%) (IEA, 2018). The residential sector has ‘the highest immediate mitigation potential in terms of absolute reductions in carbon emissions by 2030 at a cost of less than US$ 100 per ton of carbon when compared to carbon reduction in sectors such as transport, agriculture, industry, forestry, overall energy supply and waste management’ (IPCC, 2018, p.256). Housing is intrinsically linked to human health and wellbeing. Lack of housing affordability is related to mental health conditions (Robinson and Adams, 2008); the quality of housing is key to physical health and security; housing overcrowding is associated with risks of mental stress and respiratory infections (Krieger and Higgins, 2002); and a dwelling’s poor energy performance is linked to fuel poverty (i.e. the household’s inability to maintain minimum standards of thermal comfort), poor quality of life and wellbeing (WHO, 2007).

This needs to be put in the wider perspective of rapid urban and demographic changes that we experience globally today. The world population is ageing, in both expanding and shrinking cities and regions. We are also urbanising at a fast pace and unequally, in terms of geographic distribution. We need more housing, but more often we need a different kind of housing to respond to different types of households, health requirements and so on. This bears an impact on the way we live, work and move around and so, on housing as we know it. The World Health Organisation (WHO) see housing as increasingly important to human health and wellbeing, a major entry point for inter-sectoral public health programmes and primary intervention related to housing construction, renovation, use and maintenance (WHO, 2018). Housing can save lives, prevent disease, increase quality of life, reduce poverty, but also mitigate climate change, while contributing to Sustainable Development Goals such as Health (SDG 3) and Sustainable Cities (SDG 11).

But how can housing ‘kill so many birds with one stone’? In other words, how can the residential sector contribute to climate change mitigation while meeting important health, wellbeing and wider sustainability goals? It does so in a number of ways:
• Resource-efficient dwellings can significantly reduce carbon emissions, while reducing the transmission of infectious disease and help prevent many non-communicable diseases.
• Housing refurbishment or upgrading such as energy retrofit programmes improve both health and sense of wellbeing.
• Health can act as an economic driver of housing investment. While climate gains in terms of carbon reductions are mostly reaped in the future, many of the health gains are immediate and quantifiable. These include savings to households and health systems, and economies in terms of reduced illness, fewer medical visits and sick days off work and school.
• Health equity is major co-benefit of resource-clean and energy-efficient housing. For example, cleaner cooking stoves can help save the lives of nearly 2 million people annually who die from respiratory diseases related to household air pollution, including chronic pulmonary diseases and pneumonia (WHO, 2011).
• Better spatial planning for housing can reduce macro-energy costs of housing while improving access to affordable, securely-sited, safely-constructed homes with utility and transport services, as well as green spaces for physical activity and positive social interaction. These in turn can help prevent illnesses related to heat waves, unaffordable housing and poor urban environments that impact on wider societal wellbeing.

To sum up what I am trying to say here is that a two-way alignment between climate change and health and well-being related objectives in the housing sector is important and makes for more than the sum of its parts. By looking at them together synergies could be capitalised on and, more importantly, trade-offs mitigated. For example, housing energy retrofits are mostly depicted as efficient interventions for climate mitigation/carbon reduction in the sector. While their positive health and wellbeing outcomes such as less cold related deaths due to warmer homes and less fuel poverty are well acknowledged, their trade-offs are less documented. These include lack of housing affordability due to increased housing prices and rents and the ‘renoviction’ of poorer households (Grosmann, 2019; Polanska, 2017) and respiratory related deaths due to ‘too insulated or air-tight’ energy-efficient housing (Hamilton I. et al, 2015).