Abstract

This paper deals with the issue of housing market tendencies, especially in the sphere of housing finance and affordability taking into account negative consequences of economic and financial crises, and COVID-19 pandemic. The main purpose of the research is to investigate the dominant trends of housing market development, house financing and affordability based on cross-country analysis. Systematization of literary sources to describe the problem of house financing and affordability indicates that the cross-country analysis of dominant trends of housing market development, house financing and affordability was conducted fragmentary. This scientific issue is still actual. Furthermore, the experience of the European Union countries in financing social housing will be useful for Ukraine. Methodological tools of the research methods include logical generalization and scientific abstraction, structural and comparative analysis. The methods of crosscountry statistical, graphical, and analytical analysis using the Excel 2010 software package for the sample from 25 European countries for 2011-2020 (limited data in 2019-2020 due to the availability of information on open information portals of The Organization for Economic Co-operation and Development and European Union Statistical Office) were applied to determine dominant trends of housing market development, to analyse the dynamics of house prices, and financing social and affordable housing. The top countries with a highest / lowest level of social and affordable housing were identified. The results shows that the highest nominal house price indices are in Hungary, Czech Republic, Portugal, Luxembourg, Latvia, Slovak Republic and Lithuania, and the lowest indices are in Italy, Finland, Greece, Switzerland, France, United Kingdom, Norway, and Denmark. The highest real house price indices are in Hungary, Portugal, Luxembourg, Czech Republic, Latvia, Germany, Slovak Republic and Netherlands, and the lowest indices are in Italy, Finland, Norway, Belgium, United Kingdom, France, Greece, Switzerland, and Sweden. The highest rent prices are in Hungary, Lithuania, Estonia, Austria, Ireland, Poland, Slovenia, and Czech Republic, and the lowest – in Greece, France, Italy, Slovak Republic, and Switzerland. In all 25 countries from the sample there was rising both real and nominal house prices in 2020 in comparison with 2019. There was rising of rent prices in the most countries from the sample too (except of Estonia, Greece, and Slovenia). The highest share of housing owners, no outstanding mortgage or housing loan, is in Lithuania, Latvia, Hungary, Poland, Slovak Republic, and Slovenia (more than 60 %), the lowest – in Switzerland and Netherlands (less than 10 %). The highest share of housing owners with mortgage or housing loan, is in Netherlands, Norway, and Sweden (more than 50 %), Denmark, Belgium, Luxembourg, and Finland (more than 40 %), the lowest – in Poland, Lithuania, Slovenia, and Greece (nearly 12 %). The highest share of tenants, rent at market price, is in Switzerland (more than 50 %), Germany, Denmark, and Sweden (more than 35 %), and the lowest – in Lithuania, Hungary, Poland and Estonia (less than 5 %).The highest share of tenants, rent at reduced price or free, is in Ireland, Slovenia, France, Finland and Austria (nearly 15-20 %), and the lowest – in Denmark, Netherlands and Sweden (less than 1 %), Slovak Republic and Norway (nearly 2 %). These results will be useful in further studies to confirm the impact of the structure of the housing market and its financing on the level of welfare, economic growth, and sustainable development.

Keywords: affordable housing, financing, house price index, housing loan, housing market, mortgage, owner, rent, social housing, tenant.

JEL Classification: O18, O4, R2, R31.

Cite as: Ianchuk, S. (2021). Dominant Trends of Housing Market Development: Financing and Affordability. Financial Markets, Institutions and Risks, 5(1), 139-149. https://doi.org/10.21272/fmir.5(1).139-149.2021

This work is licensed under a Creative Commons Attribution 4.0 International License

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