Lack of affordable homes sparks govt action

A shortage of affordable rental homes in Europe has prompted Spain and Portugal to plot the expansion of their state-owned property portfolios.

The dearth of rentals, caused by high inflation and under-investment in the construction of state-owned housing, has led Spain to unveil plans to use a bank it assumed control of during the financial crisis to facilitate the creation of 50,000 government-owned homes.

Portugal, where homes cost more today relative to earnings than ever before, will invest 2.4 billion euros ($2.63 billion) on public housing by the end of 2026.

As Portugal's government unveiled its plans, which include the state assuming control of vacant private properties, Marina Goncalves, the country's housing minister, said years of under-investment in state-owned housing had left the country in trouble.

"The answers in the private market are not sufficient," she told the Financial Times newspaper. "This is a problem in the whole of Europe, so we need to promote new answers."

Currently, the governments of Spain and Portugal each own around 2 percent of their nations' homes. The average across the European Union is around 7.5 percent. In wealthier European nations, the percentage is higher still, with France owning around 14 percent and the United Kingdom owning 17 percent.

Supporters of government-owned housing say it gives nations the chance to subsidize their poorest citizens and those most qualified for help.

The Financial Times said rents across Europe have been rising more quickly than wages as high interest rates triggered by rampant inflation have pushed up landlords' costs, which have been passed on to tenants.

Spain's newly unveiled plans call for the country's reservoir of 290,000 state-owned homes to be expanded by 17 percent.

Pedro Sanchez, Spain's prime minister, said the issue has been a "huge and genuine problem", the Financial Times reported.

"Housing in Spain is a constitutional right, but not a real right," he told the paper.

"Young people have to wait an unacceptably long time to access housing and become independent."

The property portal Fotocasa said on Monday that rents in Spain have risen by 10 percent in the past year, pushing them to a record high of 11.55 euros per square meter a month.

People have also complained about a shortage of affordable rentals in other European nations, including the UK where the Royal Institution of Chartered Surveyors, or Rics, said rents have risen by 4 percent in the past year.

Simon Rubinsohn, chief economist at Rics, told the BBC: "Deals are being done, but a theme coming through in the anecdotal remarks is the need for vendors to recognize the shift in market dynamics."

He said the shortage of rental homes has been exacerbated by the decision of many landlords to sell their investment properties, instead of continuing to rent them out.