1In Spain, 38.4% of families with lower incomes (first quintile of income) are in a situation of overburden (households in which the cost of the mortgage or rental represents over 40% of total income). Among households in the second quintile, this rate falls to 11%, while for the total population the average stands at 19.8%.
2Looking specifically at the rental market segment, the rate of overburden of the population in general stands at 42.1%, the highest in Europe.
3In Spain, there are some 276,000 social rental dwellings, which represents just 1.5% of the housing pool. Historically, public action has prioritised access to ownership through state-subsidised housing sales.
4In Spain, investment in housing policies is at the lower end of the European comparison: it receives only 0.9% of the total budget for social affairs, which represents 0.23% of GDP.
Spending on social protection represents 39.9% of total public spending. Within this section of the budgets, there is very little margin for spending on social housing, which represents only 0.1% of total public spending. Low social spending on housing causes imbalances that overburden other welfare state benefits, which in turn affects the state coffers. Not having a decent and appropriate place to live with regard to physical and economic conditions has a negative effect on health, on children’s educational development and on the needs for assistance and social services for the most vulnerable people in the dwelling.
The right to housing is, on paper, one of the fundamental pillars of the welfare state, along with education, healthcare and social services. The possibilities of accessing decent living accommodation are determined by the housing system, i.e. the framework within which all agents (public and private) with interests and competences in this field converge and interact. Stakeholders in the housing system begin with society, which generates demand that is managed through the residential market and, to a lesser extent, private and third-sector operators. The residential market is also acted on by the financial sector and the public administration (whose decisions condition the system’s evolution). The efficiency of this structure in responding to the needs and rights of the population will depend on the types of relations they have with each other and the legal framework that regulates them.
1. Property bubbles and economic crises affect households with fewer resources
In the Spanish case, the late entrance into a regime of public policies leading to the welfare state has caused a slower evolution of the housing system than in neighbouring countries. In addition, the authorities have prioritised other social policies, rather than those focusing on guaranteeing access to decent housing. This lack of protection in housing matters has had a devastating effect on many families following the property bubble and the subsequent eruption of the economic crisis.
From the year 2000 and until the bubble burst, housing prices in Spain – as in the majority of European countries – followed speculative patterns, with prices increasing by 93%. The increase was much higher than that of wages, which progressively worsened the affordability of housing and forced households to have to make increasingly greater efforts to assume the residential cost. Once the bubble burst, despite the decrease in prices, the situation worsened due to the sudden rise in unemployment and wage cuts, within an environment of high mortgage debts faced by many households.
With these conditioning factors, the Spanish housing system thus presents major difficulties in guaranteeing a dwelling that is fit for purpose for the whole population. According to the Spanish ombudsman, in 2013 some 400,000 people in Spain were waiting for state-subsidised housing. Moreover, between 2007 and 2016, there were 720,000 repossessions and 327,000 evictions, according to data from the General Council of the Judiciary.
• Spain registers the highest rate in Europe (42.1%) of households that assign more than 40% of their family income to paying rent.
In recent years, the crisis has especially affected rental tenants. Between 2013 and 2016, a rate was maintained of some 36,000 evictions per year and, according to Eurostat data, in 2015 Spain was the European Union country where more people renting a home had to devote a large part of their income to pay the rental cost. If it is also taken into account that the at-risk-of-poverty rate is much higher among rental tenants in comparison with the population in general, beyond those who sold their homes, there are many more families in a fragile situation.
In this sense, a useful indicator is the housing cost overburden rate, i.e. the percentage of the population living in homes where the cost (whether mortgage or rental) represents over 40% of the total income of the household’s occupants. According to this indicator, and dividing the population into five income groups, in Spain 38.4% of families with lower incomes are in this situation of overburden, exceeding the European average. In contrast, among households in the next income group this rate falls to 11%, under the continent’s average. Looking specifically at the rental market segment, the overburden rate of the population in general is close to 43% and is, by a long way, the highest in Europe.
2. Many owners and little attention to rental
In Spain, rental has traditionally been a minority type of tenure, disregarded by public policies on housing matters, which have tended to back ownership. With a residential system marked by an extremely high index of owners (76.7%, according to INE 2017), the imbalance between rental supply and demand has favoured the current upward trend in prices. That, obviously, has jeopardised many families with fewer resources, who are the ones that most tend towards this housing tenure formula.
Focusing attention on the most vulnerable homes, a positive influence on the residential system can be achieved by articulating a structure for social rental. Currently, however, the weight of social rental housing with respect to the total of dwellings in Spain is among the lowest in Europe. According to one of the most precise and recent evaluations, made by Amnesty International (2015), in Spain there are some 276,000 social rental dwellings, which represent just 1.5% of the housing pool. In Europe, only Latvia (with 0.4%) and Greece and Cyprus, which have none, present lower recorded figures. In the upper part, the Netherlands (30%), Austria (24%) and Denmark (20%) are the countries with the biggest supply.
This shortage is explained by the fact that, historically, public action has prioritised access to ownership through state-subsidised housing sales, promoted above all by a system of subsidies for construction and for homebuying with tax benefits. The lack of development of the public and/or social housing pool has been a distinctive feature of the Spanish situation and is another factor that helps understand the problems in satisfying accommodation needs.
• Taking into account the high demand and the low supply available, Spain does not offer sufficient social rental. With 1.5% of the housing stock assigned to this function, we are at the tail end of countries in Europe.
Since 1952 and to date, the production of state-subsidised homes for rental or sale has remained at very moderate levels, nearly always below 200,000 units per year. In this same period, some 6.8 million homes have been built with some type of protection, according to data from Spain’s Ministry of Public Works. This represents around 26% of the total housing pool, estimated at 25.5 million homes. Therefore, these dwellings have been insufficient to satisfy the needs of citizens. Since the legal framework has not ensured preservation of the social function of these constructions over the course of their useful life, this housing pool has gradually passed into private hands and the public sector has not been able to equip itself with residential resources to tackle the needs of successive generations. Currently, the potential demand for social housing is calculated at 1.5 million households and, according to demographic projections, it could rise to 2.6 million by the year 2030.
3. Endemic public neglect
Of the main pillars supporting the welfare state in Spain, housing is the component that has traditionally had and still has the least consideration within social protection spending. In Spain, the social protection budget represents 40% of public spending (in 2016). Pensions, healthcare and unemployment benefits take up the largest part of this social protection budget, while public spending on housing does not even reach 0.1% of total public spending on social protection, and it stands at 0.2% of social spending. The average that is allocated to these concepts in the overall set of countries of the European Union stands at 2.6% of social spending.
Investment in social housing is still at the bottom of the pile, receiving little social attention. Social housing policies are allocated 0.9% of the social affairs budget, which is equivalent to 0.23% of GDP and 0.1% of total government spending. Even if total expenditure on social protection housing is combined with public investment in the development and construction of housing and community services, the percentage of GDP still only stands at 0.4%. The average that is allocated to these concepts in the overall set of countries of the European Union stands at 1.3% of total public spending, which is equivalent to 0.6% of GDP.
Furthermore, public spending on housing in Spain has been more reactive than proactive. Instead of acting in an anticyclical way by forecasting needs, on the majority of occasions, the focus has been on trying to contain the social damage caused by phases of property growth, especially the property booms of the periods between 1985-1991 and 1997-2009, when spending was reinforced.
In any event, the timid evolution of this investment – sustained by the argument that the free market is already flexible enough to cover the needs of the population – shows a lack of political will to decisively strengthen housing policy and develop an effective policy of public provision of housing or of support for household costs.
In 2016, the social protection budget represented 39.9% of public spending. Pensions, health care, and unemployment benefits take the lion’s share of this social protection budget. Public spending on housing represents just 0.1% of total public expenditure.
4. Housing problems affect all dimensions of life
Low social spending on housing causes imbalances that, paradoxically, overburden other welfare state services and, in consequence, affect the state coffers. Numerous studies coincide on the fact that a shortage of decent housing affects que quality of life of many families, given that good residential conditions are related with greater levels of physical and psychological wellbeing. Conversely, not having a decent and appropriate place to live with regard to physical and economic conditions has negative effects on health, on children’s educational development, and on the needs for assistance and social services for the most vulnerable people in the dwelling.
Overcrowding of dwellings, for example, is a common formula for reducing spending, but is also an important risk factor for suffering from infectious diseases, dermatological conditions and symptoms of anxiety, among other problems. Lack of maintenance of homes means more possibilities of suffering domestic accidents, while residential stress causes a range of mental health problems. In this sense, the Platform for Mortgage Victims (PAH, 2013) sustains that some 77% of such victims have suffered high levels of anxiety, coupled with the fact that, because of their economic situation, they also have difficulties in buying clothing (70%) and even food (45%). For its part, energy poverty facilitates the appearance of cardiovascular and respiratory problems, especially in elderly people, and intensifies other pre-existing conditions such as diabetes, arthritis or rheumatism. It is also associated with excess winter mortality.
These and other dysfunctions mean that in Spain, the direct and indirect costs of inadequate housing’s impact on health reach 22,350 million euros per year, a value only exceeded within the European context by the United Kingdom and Poland. For all these reasons, it is calculated that every three euros invested in the improvement of residential conditions for the population produce a saving of two euros in the healthcare system, according to EU average parameters.
Besides affecting health, housing-related problems also have an impact on education, as they directly increase the possibilities of absenteeism and academic failure, and they also overburden elderly care programmes, for example if, when elderly people reach retirement age, they still have a large volume of housing-related payments pending.
5. A situation common to all welfare state models
These data and situations, behind which lies the suffering of many people, confirm the failure of the housing system to provide decent and adequate housing for the whole population, so it can be concluded that the Spanish welfare state model is not efficient for providing cover and security to the weakest households. Due to a lack of forward-looking housing policies, it is forced to cover deficits, shortages and suffering with emergency, palliative social expenditure that is more expensive and less effective with regard to guaranteeing the right to housing and avoiding subsequent suffering.
Despite the different indexes showing one of the most delicate situations on a European level, the Spanish case is not an isolated one but, in fact, similar cases can be found in different states with different systems to the Mediterranean welfare state model. In Spain, the average percentage of household disposable income spent on housing is 19.8% among the total population and 38.4% among the population at risk of suffering poverty, but countries with a corporativist model such as Belgium, the Netherlands, and France have similar values. The same happens among social-democratic states (Finland), liberal states (Ireland) and states in transition (Slovakia).
This last model is the only one that shows relatively homogenous behaviour, with an economic effort for housing below the European average, while within the other models (social-democratic, corporativist, liberal and Mediterranean) it is normal to find a great deal of disparity according to the countries, with cases with very high values. This leads to the conclusion that there is no clear relationship between welfare state models and relative residential costs.
Therefore, the explanation of this disparity should be sought in the multitude of factors that influence residential effort, such as the evolution of housing prices, the percentage of the population with a home under ownership without pending payments, the pace of formation of new households, structural and cyclical unemployment, the scope of housing policies, economic development, etc.
• The comparison of housing cost in relation to family income enables the observation of disparities in all European welfare state models, so the relationship is not very clear. However, states in transition have shown more homogenous behaviour.
6. Looking forward
The problems facing housing – which are quite widespread and especially intense in Spain – have led to the right to decent housing that is included in Article 47 of the Spanish Constitution being right now a utopia rather than one of the pillars of the welfare state. There is a tendency to believe that the market will guarantee this coverage naturally, but the data provided on the need for social housing and the economic overburden of many families shows the opposite. This, combined with an insufficiency of resources and intervention instruments, is leading society to experience housing problems as an endemic evil. If there are no changes in the housing system, it seems evident that maintaining this dynamic will lead to an increase in inequalities. It will also generate more tension for the welfare state, as other fundamental rights are violated: rest, health and education can, as has been seen, also be compromised.
Housing policy, therefore, needs to rid itself of this historical lack of prominence and gain impetus if the aim is to protect housing as a basic need that has a major impact on family budgets and above all on people’s quality of life and their wellbeing. In this sense, one of the priorities should be increasing the social housing pool, currently one of Europe’s smallest, with less than ten dwellings for every thousand citizens. This would reduce the economic effort made by the population most affected and begin to put an end to the manifest lack of capacity of the free market to offer residential conditions adequate for the whole population. It is also worth emphasising the fact that investing more in housing policy would have a positive effect on the rest of the public policies related with the welfare state. The scientific evidence supporting this last point is indisputable: with more decent and adequate homes in physical and economic terms, there would be fewer health problems to treat, children’s educational development would improve, and the care and social services needs of the most vulnerable members of households would fall, reducing tension across all of these services.
This article has been adapted from these studies:
BOSCH, J. (2017): “La dimensión económica de la exclusión residencial: Cataluña en el contexto europeo”, ACE: architecture, city and environment, 34.
BOSCH, J., e C. TRILLA (2018a): “L’habitatge, punt de fuita d’eficàcia de l’estat del benestar”, Col·legi d’Economistes de Catalunya, 3r Congrés d’economia i empresa de Catalunya. L’estat de benestar: nivell i perspectives.
BOSCH, J., e C. TRILLA (2018b): “El parque público y protegido de viviendas en España: un análisis desde el contexto europeo”, Fundación Alternativas.
TRILLA, C. (2014a): “Habitatge i estat del benestar a Catalunya”, Revista Econòmica de Catalunya, 69.
TRILLA, C. (2014b): “Desigualdad y vivienda”, ACE: architecture, city and environment, 26.
More bibliographic references:
Amnesty International (2015): Evicted rights. Right to housing and mortgage evictions in Spain.
DUNN, J.R. (2002): “Housing and inequalities in health: a study of socioeconomic dimensions of housing and self-reported health from a survey of Vancouver residents”, Journal of Epidemiology & Community Health, 56(9).
EVANS, G.W., N.M. WELLS e A. MOCH (2003): “Housing and mental health: a review of the evidence and a methodological and conceptual critique”, Journal of Social Issues, 59(3).
KRIEGER, J., e D.L. HIGGINS (2002): “Housing and health: time again for public health action”, American Journal of Public Health, 92(5).
PITTINI, A. et al. (2017): The state of housing in the EU 2017, Housing Europe.
PLATAFORMA DE AFECTADOS POR LA HIPOTECA (PAH) e Observatorio DESC (2013): Emergencia habitacional en el Estado español.
WORLD HEALTH ORGANIZATION (2007): Large analysis and review of European housing and health status (LARES). Preliminary overview.