Resentment grows over housing costs in rich countries

(MENAFN) A growing sense of frustration over housing affordability is emerging in many of the world's richest countries, as rising mortgage and rent costs, coupled with a chronic shortage of new housing, fuel widespread concern. According to a report, dissatisfaction with housing costs has reached unprecedented levels, surpassing other key public concerns such as healthcare and education. The newspaper highlights data from a Gallup Analytics survey, revealing that half of respondents across OECD countries expressed discontent with the lack of affordable housing. This dissatisfaction has sharply increased following central banks' moves to raise interest rates in response to inflationary pressures. In Europe, housing prices remain higher than pre-pandemic levels, even when accounting for the increased cost of borrowing. In the United States, despite higher interest rates, home prices have continued to rise, with nearly 60 percent of respondents indicating dissatisfaction with the availability of affordable housing. Concurrently, rents have surged alongside higher costs for essential goods like food and fuel, further squeezing household budgets.

The affordability crisis is partly attributed to a slowdown in new home construction. Willem Adema, a senior economist in the OECD's social policy division, explained that a key issue is the insufficient pace of building, with developers often focusing on projects for wealthier households, which exacerbates affordability pressures for lower-income groups. Additionally, Andrew Wishart, an analyst at Capital Economics, noted that rapid changes in population trends often outpace the rate at which housing supply can be adjusted. As this crisis unfolds, the report suggests that housing concerns are likely to play a significant role in the political landscape of many countries, particularly in the United States, where elections are scheduled for November. A nespaper pointed out that the average home price in the U.S. has risen by about 38 percent since President Joe Biden took office in January 2021, according to the Case-Shiller Home Price Index.

Research from the Joint Center for Housing Studies at Harvard University further illustrates the growing affordability challenge, noting that the monthly payment on an average-priced home with a low-deposit loan, often preferred by first-time buyers, has climbed to USD3,096, up from around USD2,000 in January 2021. Meanwhile, many current homeowners benefit from 30-year mortgages locked in at very low-interest rates, resulting in a historically low proportion of their income being devoted to debt service since 1980. The Gallup survey data, collected from over 37,000 respondents in 37 OECD countries, indicates that dissatisfaction over housing affordability is most pronounced among younger people, particularly those under 30 and those aged between 30 to 49, many of whom are likely trying to enter the property market. While 44 percent of those over 50 expressed dissatisfaction with their housing situation, the figure rose to 55 percent among those under 30 and 56 percent among those aged 30 to 49, underscoring the generational divide in the housing affordability crisis. 

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