Housing: Towards a redistributive conflict?

We are once again in a situation similar to that of the early years of this century: strong demand for housing from both nationals and foreigners, both for purchase and rental. However, unlike twenty years ago, there is no—or very little—construction. Even public housing has collapsed and is no longer growing. It is worth remembering that the surplus of housing that remained unsold or that no one wanted to buy after the 2008 real estate crisis has weighed heavily on many individuals, on banks and savings banks—to the point of causing the ruin of some and the disappearance of others—and on public administrations. These homes have been impossible to sell or rent because they were poorly located and because they have deteriorated significantly. Furthermore, the European approval of new—much more demanding—rules on credit granting has significantly slowed private financing, which was very dynamic in the early years of the 21st century. This is no longer the case.

Currently, the situation is, as it was at the beginning of the century, one of population growth due to immigration and a high demand for housing. On the contrary, domestic demand is much less solvent and the housing supply is much scarcer. This is the core of the current conflicts. This is causing the problem of access to housing to be increasingly presented as a crudely redistributive conflict. This change in approach is a recipe for disaster, because nothing divides and angers more than distributive conflicts in which some want to improve their situation by reducing or eliminating the rights of others, and these others are frightened by the possibility of being expropriated. We are in states—the European welfare states—with very high taxes and where significant redistribution via taxation is already taking place. If we do not want to strain society and force solutions in which the supply response is complete retraction ("sell rather than rent without legal security"), broad pacts that everyone can understand are necessary. Given that real estate is heavily supervised by all administrations—it is the ideal target of any tax—playing with legal certainty is very dangerous. Real estate owners can flee in all directions—they are already doing so—starting with selling and exchanging their assets for financial assets, whether fixed-income or variable-income. Surprisingly, no one questions financial assets or proposes their socialization, so real estate assets are politically incorrect, but financial assets are not. We are already beginning to see this phenomenon in action, and it will only grow if real estate property or income becomes a battlefield.

What is needed is a strengthening of legal security for landlords, guaranteeing that their homes cannot be occupied or that rent cannot be defaulted. Only with this will an abundant supply of rental housing reappear. From the perspective of landlords who are withdrawing from the rental housing market, it is deeply painful that public administrations allow the bad luck of a job or the bad luck of a tenant who doesn't pay and who can drag out their non-payment for years to be a negative lottery that can fall to any citizen without the administrations doing anything to prevent it. Furthermore, these administrations do not promote public rental housing, as would be their obligation. This conflict is putting a strain on the public sector and could lead to far-reaching reorientations of votes and political loyalties, even more so than immigration is already causing.

If we add the tension represented by the desire to moderate and reduce CO₂ emissions in a context of strong population growth in which no one wants to give up enjoying the level of well-being of previous generations, the situation becomes even more complicated. We see this in other countries where "We pollute!" has become a mobilizing political message because it is associated with greater well-being and wealth. The alignment of the different needs faced in the housing market becomes extraordinarily complicated if we add our obligations of environmental sustainability to future generations.

All of this is a puzzle in which the pieces do not fit. Negotiations are needed between parties, between interest groups, between generations, and between sensibilities, but let us not forget that the questioning of legal certainty is at the root of all the radicalisms that can lead to uncontrollable tensions. We are approaching the 1930s in many ways. We hope it is not the same in the radicalisms of almost a century ago. There are alternatives worth exploring.