G. Mastorakis
The article provides overwhelming evidence about Greece’s housing problem compared with the other EU Member States. These data constitute clear proof of the extremely urgent need for decisive measures to address the housing crisis in Greece.
The country ranks first in the EU in the share of the population that is heavily overburdened—spending more than 40% of disposable income on housing costs—at a rate more than three times the European average. At the same time, Greece ranks second in Europe in the proportion of the population unable to keep their home adequately warm; first in the EU, with a population more than four times the European average, in arrears on housing payments (utility bills and mortgage instalments or rent); first in the EU, with double the share of people unable to rent a home over the last 12 months; third in the EU in annual rent price increases; and third in the EU, with half of the population reporting excessive financial strain from housing expenses.
In addition, the country leads in house-price increases relative to income. It is noted that over the past five years, house prices have risen by up to seven times the change in citizens’ real income. Moreover, Eurostat data on homeownership indicate that 246,947 households—corresponding to a population of 585,394 members in Greece—have no longer been living in their own home over the last five years.
Consequently, it is emphasized that in 2024 Greece is the third country in the EU in the share of tenants renting at expensive market rents (76%), in contrast to the Netherlands—which has a strong stock of social housing—where only 17% of tenants pay the high rent set by the market. It is largely unknown that in Europe the norm is that 35% of tenants pay reduced and affordable or regulated rent, rather than the unrestrained rent of the free market. The article highlights the fact that Europe has a significant stock of affordable or social housing, with an average share of 11% of the total housing stock. It also points to the striking examples of the Netherlands, Sweden, Austria, Denmark, and France—countries with strong social-housing stocks ranging from 17% to 29% of their total number of dwellings.
In light of these distressing data—reflecting Greece’s repeated ranking among the EU laggards in state provision for the housing crisis—and with reference to the latest European developments, whereby a number of countries are taking the lead in building social housing to respond to persistent demands from their citizens, the article sets out a proposal for the urgent construction of 80,000 dwellings and the renovation of 20,000 state-owned properties, accompanied by a business plan. Before presenting it in detail, comparable European examples of financial design are discussed and extensive evidence from studies is provided on the positive economic effects of the state’s provision of affordable housing.
The business plan is based on the flexibility offered by European fiscal rules to establish public entities outside the General Government sector, financed through borrowing via bonds issued by the entity and guaranteed by the state. These entities have a continuous flow of revenues from assigned public revenue sources, and their expenditures are not counted in the fiscal balance. The article proposes the creation of such an entity and sets out, specifically, the business plan it would draw up. The investment’s viability is also assessed using the Net Present Value method.
The business plan suggests that the initial €5.4 billion investment—through a loan guaranteed by the Greek state—for the construction of 60,000 homes and the renovation of 20,000 existing state-owned properties is viable over a ten-year horizon and enables self-financing (investment using the entity’s own resources) of an additional €2 billion in the fifth year to create a further 20,000 homes. Revenues from DYPA (the Public Employment Service) derived from social security contributions (formerly earmarked for the Workers’ Housing Organization and the Workers’ Social Center), which amount to 3% of total annual contributions, are assigned to the Housing Entity and are expected to generate €8.3 billion over the decade. The entity will also have a steadily increasing level of revenue from the rents of the homes it allocates, which are set at below 50% of the market level in the area where they are built.
Overall, the entity’s investment will deliver to Greek society an additional 80,000 newly built homes and 20,000 renovated units—an explosion of benefits for 100,000 households and for the country’s economy. The homes will meet strict specifications to ensure the best possible environmental footprint. A substantial share could be bioclimatic or open to experimental influences. In addition, benefiting from economies of scale, they could serve as models of a distinctive Greek architectural style, setting an example for the private construction sector as well.
In any case, the proposed entity would be complementary. It could operate in parallel with public services of a Deputy Ministry of Housing pursuing construction targets of similar scale or other objectives funded through state expenditure, drawing on surplus primary surpluses in combination with favourable housing programs (exemptions from state-aid rules, etc.) expected under the European Affordable Housing Plan announced by the Commission but not yet put into operation.
