Demise of the Dutch social housing tradition: impact of budget cuts and political changes

At the beginning of the financial crisis in 2008, the Dutch housing associations were in the position to perform a kind of anti-cyclical housing production that could save, at least partially, the total housing production in the Netherlands. In this contribution, we give insight into the way the housing associations managed to fulfil this specific task and more in general if the associations managed to strengthen their position since the economic crisis. After presenting the development and the main characteristics of the Dutch social rented sector, we give an overview of the general economy of the Netherlands since 2008, which suffers from the global credit crunch, followed by the debt crisis and the Euro crisis. Because of the strong international relations and the big size of the Dutch banking sector, the Netherlands appears to be very vulnerable for international financial problems. In the aftermath of the credit crunch, the Dutch government decided to give priority to a sound public budget and announced in 2010 and 2012 huge budget cuts. The rented sector was already faced with drastic reforms and huge budget cuts by the start of the Rutte I Cabinet in 2010. These policies are described and analysed. The increased impopularity of housing associations explains that these social housing providers were extremely hit by additional budget cuts. For the housing associations, the situation is threatening. The Rutte I and Rutte II Cabinets seem not to be aware of the rich tradition of the Dutch social housing sector and want to reduce the size of the social rented sector (now: 31 %) substantially. This contribution argues that there is the danger now that the austerity measures of the current government (Rutte II) will lead to the demise of the Dutch social housing tradition, although the housing associations could be a part of the solution for alleviating the current problems on the housing and construction market.     

The credit crunch: impacts on the housing market and policy responses in the Netherlands

This contribution deals with the impact of the credit crunch on the Dutch housing market and the policy responses of the Dutch government so far. Reinhart and Rogoff have presented an overview of credit crises after WW II: what are the general characteristics and impacts? Also in the Netherlands, banking problems were imported from the US. The open economy of the Netherlands appeared to be very vulnerable to the worldwide credit crunch. Also in this country the real economy worsened. Housing construction fell sharply, while prices of residential properties fell more gradually. After giving an overview of the Dutch government’s current policies to stimulate housing construction and renovation, we consider whether the Dutch economy is following the general pattern sketched by Reinhart and Rogoff. If so, we could expect a continuation of the crisis on the housing and construction market for another 4 years.     

The global financial crisis and the Australian and New Zealand housing markets

The evolution of the US sub-prime mortgage meltdown into a global financial crisis clearly demonstrates the increasingly integrated nature of mortgage and capital markets. However, notwithstanding the global scale and severity of the recent financial crisis, the effects of the credit crunch were mediated by nationally constituted housing markets, the activities of local financial institutions and national housing policies. Adopting an institutional perspective this paper critically examines the manner in which the financial crisis impacted upon the Australian and New Zealand housing markets. These countries had actively participated in the liberalisation of mortgage markets and experienced significant house price inflation post-2000 but, in contrast to the USA and some European experiences, they escaped a severe housing downturn. It is argued that a combination of pre-existing institutional practices, market conditions and government policies acted to shelter these markets and created the potential conditions for a new housing boom. While avoiding a deep housing slump, both Australia and New Zealand have to address the on-going macroeconomic implications of a system predicated on housing inflation and capital gains.     

The Italian housing system and the global financial crisis

The paper describes the main features of the Italian housing system and the relatively recent changes toward a more market-driven model and their respective critical elements. It also provides an analysis of the effects of the current global financial crisis (GFC) on this system and discusses how the government, market actors, and households are dealing with it. In comparative terms, the impact of the credit crunch has been softened by the crucial role traditionally played by the family in funding home ownership and by certain policy measures. But the GFC has led to further cuts in housing policy and to diminished economic capacity among households. Affordability was a severe problem even before the GFC, especially in the rental sector. Social housing is now collapsing, and there is a great deal of uncertainty about the future of new programs under development just before the crisis.     

Market orientated housing policies and the position of middle-income groups in the Netherlands

As a result of the poor economic climate and neo-liberal policies, the welfare state in many European countries is becoming more residual and is directing its efforts at seriously deprived households. This development is affecting the middle-income groups, who enjoy less protection than before and are therefore forced to become more self-supporting. We can find a good illustration of this trend in the changing position of these groups on the Dutch housing market. The market orientated EU policies are denying middle-income households access to the social rented sector. Meantime, these households are already encountering accessibility problems in the owner-occupied sector due to the economic crisis and the tougher mortgage conditions set by the financial institutions. This paper describes the housing policy changes against this background and analyses the position of middle-income groups on the Dutch housing market.     

The continued retreat of non-profit housing providers in the Netherlands

After the abolishment of object subsidies for housing construction and renovation in the mid 1990s, Dutch housing associations, the main non-profit housing providers in the country, heavily relied on market activities, such as selling homes to owner occupiers, to generate income for their social activities and to contribute to urban development policies. This worked well, which was one of the main reasons that these housing providers could adopt a wide field of operations, including not only the management and development of affordable housing for low-income groups, but also housing in other market segments, plus activities regarding care, welfare, local economy, employment and education. Recent economic and political developments, however, have caused housing associations to return on this path. Central in this paper is a research among Dutch housing associations about their values, strategic positioning and strategies. The research was executed in two waves (conducted in 2010/2011 and in 2013/2014, respectively), each consisting of a panel survey and interviews with selected panellists. This paper presents the results of the second wave. It is expected that after the first wave of the research, new regulations, such as the national implementation of European rules on state support and the introduction of a new property tax, have resulted in a further retreat from non-social housing activities. The analysis shows that this is indeed the case, but that the main shifts in priorities have not taken place directly after the credit crunch, but in later years.     

Policy changes affecting housing and mortgage markets: how governments in the UK and the Netherlands responded to the GFC

Governments across the world have faced a difficult balancing act in reacting to the GFC: housing markets and in particular new construction have slumped and mortgage lending is down, calling for measures to stimulate output. But the crisis was brought about in part by the proliferation of new mortgage products and lax lending standards from the 1990s onwards—calling for tighter regulation. This paper examines the cases of the UK and the Netherlands. Both countries have high levels of mortgage debt to GDP and well-developed mortgage markets, but the important institutional differences between them, and the fact that their housing-policy developments often serve as models for other countries, make a comparison worthwhile. The paper takes a system-embedded approach to describing the housing and mortgage markets, and the governments’ post-GFC responses. The countries enacted similar short-term stimulus measures for the housing market but have adopted stricter long-term regulations for the mortgage market, which replace the assumption of rational consumer behaviour with the principles of behavioural economics. The institutional frameworks condition the effects of such measures, so outcomes will differ, but tighter regulation of mortgage markets can be expected to reduce demand for owner-occupied housing.     

Eight Policy Lessons from the US Housing Meltdown

The global financial crisis has generated many lessons for policy makers in the housing sphere, as well as in financial regulation. This paper discusses eight lessons drawn specifically from the United States housing meltdown that triggered the crisis. The housing sector is important for monetary policy and financial stability, highly interconnected with the financial system, and dependent on institutional details that vary widely across countries and through time. Easier and cheaper access to finance does not improve long-run housing affordability; but if credit conditions ease too much and the credit assessment process breaks down, strategic default becomes more likely. That defaults rose so far in the US shows how unusual its housing system is—a fact not revealed in simple aggregate statistics. One element of the US exceptionalism is that housing supply is quite flexible there, and that helped produce the bust.     

The alternative financialization of the German housing market

While many European countries experienced a global housing boom in the early/mid-2000s, house prices and mortgage debt in Germany stagnated. Therefore, the German housing system is considered to be operating outside financialized capitalism. Despite Germany’s apparent stability, we argue that an alternative trajectory of financialization in the German housing market can be observed. This trajectory has followed three stages or ‘waves’. The first wave started around the time of German unification and is characterized by the failed attempt of West German banks to marketize and liberalize German housing finance. The second wave started in the late 1990s and is characterized by the ‘financialized privatization’ of many public housing associations and the speculative investments of private equity firms and hedge funds. The third wave started during the global financial crisis and is characterized by booming housing prices and the market entry of listed real estate companies.     

Causes and Consequences? Exploring the Shape and Direction of the Housing System in the UK Post the Financial Crisis

The impacts of the global financial crisis continue to reverberate around the world. This paper explores its impacts in the UK in general and England in particular in relation to the housing market and housing policy. It examines the underlying trends which were already in place before the financial crisis and the impact of the crisis and the government's policy responses on the housing and mortgage markets. The paper argues that the crisis mainly exacerbated already long established tensions while the current policy solutions have ameliorated, but not fully, resolved these pressures.     

The economic consequences of mortgage debt

Unsurprisingly, a great deal of attention has been paid to the economic consequences of the credit crunch. However, this paper shows that the credit crunch was preceded by a strong build-up of mortgage debt internationally, which, in the long run, could turn out to be more significant than the credit crunch itself. Indeed, the debt build-up suggests that the credit crunch is more likely to reoccur, because highly-indebted households have weaker buffers to withstand unexpected shocks to their incomes or to interest rates. The paper presents a model that can explain the debt build-up and changes to the distribution of debt between existing owners and first-time buyers, which hinders access to home-ownership for the latter, even amongst those households who would be considered as credit-worthy.     

The choice for expensive owneroccupancy in the Netherlands

The demand for expensive owner-occupied dwellings in the Netherlands needs to be better understood, as this sector is expected to account for an increasing share of the existing housing stock in the near future. This expectation is partly based on changes in government policy made in the past and anticipated for the coming years. To gain insight into the development of that demand, it is important to know which types of household are moving into expensive owner-occupied dwellings. A logistic regression analysis was carried out to determine which factors affect a household's decision to move into a dwelling of this type and how these factors have shifted in the period 1976–1989. This paper argues that even though the household career/lifecycle stil has a strong influence on that decision, the housing market situation should also be taken into account. While demographic and socioeconomic developments suggest a potential for expansion in the more expensive owner-occupied market, the housing market situation might hinder that growth. Harry Boumeester is a researcher at the OTB Research Institute for Policy and Technology, Delft University of Technology. His Ph.D. research concerns the analysis of developments in the demand for expensive owner-occupied dwellings in the Netherland during the last 20 years.     

Shifting back-changing organisational strategies in Dutch social housing

Since the financial liberalisation from the government in the late 1980s and the 1990s, Dutch housing associations have been very dynamic, embracing both commercial and social activities, becoming increasingly reliant and dependent on market circumstances and undergoing a large number of mergers. In recent years, the Dutch social housing sector has been under increased pressure due to the global financial crisis, increased levels of taxation and the national implementation of EU regulations on ‘Services of General Economic Interest’. It seems likely that factors like these have had an effect on the organisational strategies adopted by housing associations, but the nature and magnitude of these effects are not well known. This paper explores these effects through a survey among Dutch housing associations. The results of the survey were analysed using a social-commercial dimension and a ‘prospector’ – ‘defender’ dimension. Our analysis reveals that housing associations are focusing more on traditional social housing tasks and ‘defending’ strategies, implying some reversal of the developments that had occurred in recent decades.     

Naturalization and the transition to homeownership: an analysis of signalling in the Dutch housing market

Abstract

This article pioneers in investigating a citizenship premium for homeownership of first-generation immigrants, using Dutch register data from Statistics Netherlands (N?=?106,187). I hypothesize that naturalization favourably influences the risk-calculation of lenders through positive signalling among employed migrants, who are likely to meet the basic financial criteria for credit. Results confirm that, all else constant, employed immigrants who have naturalized are 26% more likely to be homeowner. Additional analyses specifically designed to isolate endogeneity bias show that the effect is smaller, but still reveal an increase in the probability of homeownership after naturalization. Citizenship acquisition matters less for migrants with a native-born partner, suggesting that legal status discrimination may be an underlying mechanism. I find no evidence that the relevance of citizenship is conditioned by cultural distance of the origin country or the post-2008 economic crisis. I conclude that naturalization matters in the housing market, but that its relevance cannot be generalized to all migrant groups.     

Political Economy and Housing in the Twenty-first Century – From Mobile Homes to Liquid Housing?

The recent Global Financial Crisis started as a crisis in the US sub-prime mortgage market, and rapidly spread to a wider financial crisis. This article suggests that beyond the crisis, we can now see that households are playing an evolving role as a site of risk absorption. In so doing, households have become a frontier of capital accumulation, not just as producers and consumers, but also as financial traders. Households are increasingly buying financialized products as an ordinary part of daily subsistence – houses, insurance, education, electricity and mobile phones. But at a level beyond the household’s daily reality, these regular purchases are being re-specified as assets, on which asset backed securities are built and then traded. It is in this way that by securitizing mortgage debt, finance has given global liquidity to housing. The size of securitized markets on housing as well as household assets and payment streams now dwarfs stock markets. The requirements of this emergent financial citizenship for the house and households extend beyond just honouring payments on a home purchase, it is requiring a culture of financial calculation that becomes absorbed as part of the daily norms and dispositions of social being. The presumption of rights of access to housing, education and health care are being replaced by the acceptance of individual financial participation and calculation. Here, we argue housing is being reconstructed as both the capital base for, and site of, individualized life course risk management.     

曲折前行

2011年二季度以来,实体经济增长出现了一定程度的放缓,主要是遭遇了多重约束条件的拖累.不仅仅是信贷收紧,还包括供电缺口、原材料价格上涨、人力成本上升以及人民币升值等诸多因素的综合作用,使得中国经济微观主体的发展面临一定的考验,工程机械等制造业也同样陷入低潮期.     

Mortgage-equity release: the potential of housing wealth for future Dutch retirees

Interest in the use of housing wealth for future retirees is a topic of growing interest amongst policymakers and scientists. Owner-occupiers who are outright owners have lower housing expenses than tenants do, and they have substantial nest eggs. Mortgage markets leapt on this development and offers special products for the elderly, with which they could release their housing wealth. The question in this paper involves the extent to which households build housing equity (i.e. wealth) that could be released. This question is particularly interesting for the Netherlands, the country with the highest mortgage debt per capita in the European Union. This paper aims to combine two different theoretical debates: the debate on “the trade-off between owner-occupation and the welfare state” and the debate on the “life cycle theory”. It introduces the concept of the equity-to-value ratio, which is derived from the trade-off theory, and reveals the extent to which the people in the Netherlands accumulate housing wealth. This ratio shows that households do build equity. Further analysis indicates that this equity is not built as much by repaying the loan as it is by taking advantage of house price increases.     

Why Not Cash Out Home Equity? Reflections on the Finnish Case

Recently, many governments have sought ways to secure the provision of an adequate level of income for their ageing populations. The notion that citizens themselves should provide a part of their future livelihood is gaining ground in European societies. One possibility is to apply the wealth that individuals have accumulated during their lives. An owner-occupied dwelling is the largest piece of wealth that ordinary households possess. It constitutes an asset that households can transform into money. Banks have developed various financial instruments for households to transform their housing equity into money. However, housing is not a comparable asset to financial investments, such as stocks or shares. Homes have a special meaning for individuals, and this makes a dwelling a special good that cannot be traded at will. This article is based on a qualitative interview study conducted in Finland. We will examine how Finnish homeowners justify their generally negative attitudes towards using housing equity. One of the issues that households face is that by employing financial instruments, they would be remortgaging a debt-free house, and homeowners would find this undesirable. Is there a specific moral aversion to debt? Is the owner-occupied house a “sacred” possession that cannot be cashed out?     

The Global House Price Boom and its Unwinding: An Analysis and a Commentary

The unprecedented rises in house prices across much of the industrialized world during the period 1997–2006 have been closely linked to the massive global credit expansion of the past decade. They have also coincided with the highest rates of growth of the global economy on record. The downturn of house prices in the US that began in late 2006 has been the trigger for the US sub-prime crisis, itself the catalyst for the broad financial crisis that began in August 2007 which by September 2008 had become the worst US financial crisis since 1929. As a result, the structure of the highly influential US mortgage finance system has already changed fundamentally. These US problems will lead to a thorough review of mortgage securitization processes and of the wholesale funding of mortgage finance across the world. However, housing markets and housing finance systems differ significantly between countries and will channel the shocks originating from the US with varying intensity. Given the interdependence of the global economy, the quality of the US policy response and its impact on the depth and duration of the US recession will influence house price downturns in all other countries. This paper, written in the midst of the US crisis, looks to our understanding of fundamental economic and financial relationships: first, to describe the key features of the house price boom; second, to examine the likely impacts of the unwinding of that boom; and, finally, to bring out implications for affordability, the provision of housing credit and the most appropriate forms of tenure for higher risk households.     

Decline and depression: the impact of the global economic crisis on housing markets in two post-socialist states

The goal of this paper is to outline the main factors influencing the diverse consequences of the global economic crisis on housing and mortgage markets in two post-socialist economies—the Czech Republic and Hungary. In the former there was a mild decline of markets while in the latter there has been a depression of markets. The paper also contributes to the convergence and divergence debate on housing policies in Europe. In the last two decades the post-socialist states have moved toward a market-based housing system (a convergence trend), but substantial differences have simultaneously emerged in tenure structure, housing finance institutions and housing policies (divergence trends). The Czech Republic and Hungary have introduced efficient market reforms in their economy but they have followed different paths in reforming their housing systems. This article shows that divergence in housing systems explains some of the differences in the impact of the global economic crisis on the housing and mortgage markets. However, the article concludes that housing policy responses to the impact of the global economic crisis on housing markets may on balance reinforce convergence trends.