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Affordable Housing a Key Focus for Global Apartment Markets

May 2019

Apartment owners abroad are experiencing criticism over a perceived lack of effort in addressing a dearth of affordable housing across global markets.

Berlin recently witnessed citizen protests, with words such as “crisis” and “acute” being used to describe the affordable housing situation there. The United Nations, among other global groups, are addressing the topic, calling for housing to be considered a basic human right.

Similar to domestic reports about market-rate rental housing outpricing many U.S. residents, especially in urban employment hubs, rents are growing faster than wages in many global markets despite a six-year period of relative global prosperity.

For example, estimates say housing costs in the German capital have doubled during the past 10 years, according to The Wall Street Journal (WSJ).

Protesters are calling for the Berlin government to seize properties owned by private owners through ballot proposals, with petition efforts underway, reports WSJ. Similar protests also are taking place in Munich and Cologne.

“Ten years ago, empty apartments were the problem in Berlin,” Julian Zado, Deputy Head of Berlin’s Social Democrats and one of the activists behind the push for a five-year rent freeze, told WSJ. The city sold more than 65,000 publicly owned apartments to private investors in 2004.

Among the causes are migration from the suburbs to jobs downtown as well as the inability of governments to subsidize new housing because their budgets are strained by aging populations with increasing health-care and pension obligations.

Foreign investors also have driven up rental rates, particularly in cases where low-income housing was purchased and repositioned for higher rents, says United Nations human rights experts, according to Thomson Reuters. Urban housing also is being used for short-term rentals to serve tourists, further constraining supply.

Authorities in Denmark, Ireland, Spain, Sweden and the Czech Republic argue preferential tax laws and weak resident protections in these countries have left vulnerable communities at risk of eviction and homelessness, according to Thomson Reuters.