Special committee on the Housing Crisis in the European Union Ordinary meeting
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Irene Tinagli
Thank you, Isabel. Regarding your last point on the future of this committee, this is something that will have to be discussed at the coordinator's level. So I think that probably in the next.
Coordinators, this will be raised and addressed. And then on the public hearing, we are working on it.
Will not happen before May. So it will take some time to organize everything. Thank you. Thank you very much. Okay.
Yes. Now we can go to the video.
Speaker 7
Dear chair, honorable members, esteemed colleagues, it is my pleasure to address this committee. Allow.
Speaker 8
To start by congratulating the European Parliament on its resolution on the housing crisis in the European Union adopted on March 10, and on the European Commission's first affordable housing plan, launched last December. They truly describe the complexity of the housing challenge in Europe and advance solutions that reflect a very broad base of housing needs, including homeless people, youth, people with special needs, people on low and middle incomes, while also underscoring the need for environmental sustainability. These achievements empower the market by cutting red tape and promoting innovative financing pathways, while recognizing the need for public intervention to ensure that no one is left behind. The challenge you are addressing in Europe reflects a broader global crisis. Today, nearly 3,000,000,000 people live in inadequate housing, over 1,000,000,000 live in informal settlements, and around 300,000,000 people are homeless worldwide.
In Europe, the pressure is visible as well. House prices in the EU increased by an average of 53% between 2015 and 2024. The housing crisis is not simply about supply. It reflects deeper choices about what housing systems are designed to achieve and who they serve. Over recent decades, many countries shifted from strong public housing systems towards market-led models and home ownership.
More recently, housing has become increasingly integrated into global financial markets, creating a growing disconnect between housing as a financial asset and housing as a social good. At UNHAVTANT we emphasise adequate housing as a human right. Adequate housing means secure tenure, access to basic services, safe and affordable homes, and locations connected to jobs, to services, and transportation. Achieving this requires several important shifts: First, we must re-centre housing as a social infrastructure, grounded in human rights and focused on adequacy and inclusion. Second, we must recognise the social and ecological functions of land and housing, including better land governance, value capture and sharing, and respect for environmental limits and resilience.
Third, we need to redefine the role of finance. Finance should serve as a tool to deliver adequate housing, not drive speculation or extractive rent models that undermine affordability.
Fourth,
Speaker 8
There is no single housing model that works everywhere. As indicated in the resolution and the European Affordable Housing Plan, addressing the crisis indeed requires a plurality of solutions: public and social housing, rental affordability tools, cooperative and community-led housing, upgrading of informal settlements, and diverse tenure models. Markets play a critical role, but they must be well-governed to ensure they deliver affordability and inclusion. We should enable them to deliver results, and regulate them where they undermine affordability and adequacy. The key question should always be: for whom and under what rules?
Housing is rising on political agendas worldwide. As we prepare for the World Urban Forum in Baku from the seventeenth to May 22 on the theme housing the world's safe and resilient cities and communities, we look forward to learning from Europe's experience and sharing lessons from other regions. 2026 is also a significant year as it is the mid-term review of the new urban agenda ten years after its adoption at Habitat three in 2016, where we will review the progress while looking to the next decade of implementation until 2036. Housing must be at the centre of the next phase of the new urban agenda if we are to accelerate progress. UN Habitat wishes the European Union the very best in implementing the European Affordable Housing Plan.
We trust the momentum generated by the House Committee and the European Commission Task Force on Housing will continue to grow, as plans become actions that lead to impact. We are ready to support and to facilitate the two-way exchange of good housing practices between Europe and the rest of the world, including through the open-ended Intergovernmental Expert Working Group on adequate housing for all UN Habitat, as well as the implementation of our own strategic plan from '26 to '29, which focuses on housing, land and basic services at the core. I also very much look forward to visiting you in Brussels in June, and continuing this conversation. Thank you.
Irene Tinagli
Okay. So now I open the floor for possible questions or comments on this aspect, and I give the floor to Andreas Schieder.
Andreas Schieder
Yeah. Thank you, Irene, for giving me the floor. And I think it was a very interesting interventional video, which the UN was sending to us because I think it was perfectly on the edge on the issues, which we also were addressing in our report. And I think the most important thing, and this is maybe the result also for our future work, is that it is about several models, but also meaning that we cannot leave the housing issue to the market itself because it is for whom we do. It's for the people to have a roof over the top, as the human right of housing is also saying.
And I think it is also, we have to be aware that it's also about the question in which cities and in which frameworks in our society we want to live. If it is integrated, it means also socially integrated, that there is no slums on the one side and gated community on the other side. And also that all the chances which society should provide are also somehow linked with a good housing system. So the rule of finance, as she also stated, fighting speculation, but enabling to finance also housing projects, I think, is also one issue, which we maybe as housing committee should look deeper at the same moment also on different models, as she was also mentioning, cooperative ones, non profit ones, limited profit ones, regulated market ones. And this could be in addition to our report, also for the future discussion of higher interest.
Speaker 10
Thank you very much for inviting you and Habitat to join this committee. And please, I'd like to share the apologies of our executive director who had very much hoped to have joined you live remote from Kenya. But unfortunately, as the chair mentioned, her availability was compromised with a presidential visit in Kenya, which pushed the schedule a bit. So she does, share her apologies and hopes to have the opportunity to meet in June when she comes on the June. But thank you also for the comments that were made.
Speaker 11
Indeed, we're very encouraged with the progress of the affordable housing plan and with the resolution that came through this committee and was endorsed on the tenth of March. It appreciates the broad debate on housing, including the needs to finance housing, but also the needs to protect the rights of the poor and the most vulnerable. And the efforts are there to balance the role of the private sector and the role of the public sector. But also, as the honorable gentleman mentioned, the need to ensure that the regulations are there to prevent the exploitation of the housing market for finance. I mean, the challenge we have globally as well as in Europe is this is on one hand, housing being an asset, a financial asset, but also a human rights and a social good, and there is the needs to rebalance this.
Speaker 12
So, as well as the affordable housing plan that creates the legislative and financial and knowledge pathways, I think this is also important to link this with economic strategies and spatial strategies, trying to understand the alignment with the growth and the dynamics of human settlements. We see in Europe that large cities are continuing to grow. Smaller cities, intermediary and secondary cities, tend to shrink except when they're well connected. So I think they are well connected in the major cities, well connected with transport, broadband, and new ways of working. And we do believe that a focus on regional development and the infrastructure of connecting smaller towns to larger cities can also help support the delivery of housing.
So we encourage a broader perspective that looks at housing within the context of urban development. But we the executive director also wants to stress how globally, as we address the global crisis, we'd appreciate learning from the depth of work that this committee has undertaken, the incredible amount of research that's taken place, and the solutions that are coming up through this committee as well as through the commission, and to be able to share the lessons globally. We have the challenge, for example, of short term rentals all over the world and some of the solutions that you'll develop in Europe will definitely be useful, globally. So we do hope to have an exchange of practice between Europe and globally so that the work that you're doing here can also resonate and help create solutions globally. Also, possibly, particularly in sort of dense urban areas, there might be some lessons globally that can also come and support Europe.
So we do really hope for an exchange, an exciting exchange of knowledge. And finally, housing is a new agenda in Europe. It's super important that the commitments and the momentum is reflected with financial commitments. And we do hope then that there is a way that the MFF can support taking this agenda forward because it is a very important issue as the, as has been, stipulated and emphasized by the president of the commission, for all of Europe. So we wish you the very best and the continuation of this momentum.
Thank you.
Irene Tinagli
Yes. Thank you very much. No. I'm sorry. But as you were talking, I was also thinking, and I have a couple of questions myself.
I was just wondering if in your work and experience on the housing issues worldwide, first, if you can identify some causes of housing stress outside Europe that maybe have not been addressed in our report, in our work, maybe there are different trends, but things that we should monitor, that something that we can still learn from outside Europe. And second, what are, outside Europe, the areas where you see the biggest stress and trends of increasing housing stress, and also possible ideas or practices or solutions that we haven't identified in Europe, but that could be a source of inspiration specifically. Maria. And I noted, Maria also wanted to intervene. Yes?
Maria Ohisalo
Thank you very much, chair. So I'm replacing our coordinator, Gordon Pozanak. Thank you for giving the floor. I'm Maria Oissel from the Greens/EFA, and I come from Finland. And I used to work also as a minister of housing in my home country, Finland, in the previous government.
And as you know, when you look at the housing prices, Finland, and if you look at the homelessness rates, Finland has been very successful in housing policies. And what has made us successful has been the mixed model where you have all kinds of different modes of housing in the market, and you don't give too much of a role to only speculators and only investments from the private sector. And now we were talking about the report that was, that came out of this house a couple of weeks ago. Many have stated that it was the first report on housing from this house, but this is not true. I wanna correct this.
Actually, in the previous mandate, I think you probably also know that there was a couple of reports done and also one on housing affordability, which was very progressive in the sense that that report actually stated how and saw housing as a human right as was stated in the speech here and by you. And I want to thank you for that because it gives a very different perspective on housing if you first lay down the premise that housing is a human right, and then follows everything else. But if you don't see that, if you see that it is something else, like, for example, if we look at this report now, some of us were more critical towards it than others. Not all the groups were voting in favor of the report. Us, as Greens, EFA, we voted against this report.
Even though it lays down many important topics, it still does not give solutions to the greatest problems we have in the housing market. The speculation, financialization, proliferation of short term rentals, it does say see it, but it sees it more as a positive tourism tool. And then we have problems in the city centers of Rovaniemi, in Finnish Lapland, and in Lisbon, in Portugal, then normal people, policemen, nurses cannot afford to live in the city centers anymore because it's full of short term rentals. So from our point of view, this report lays down more of an idea and a narrative of homeowners, of the construction sector, and of even the speculators and the ones using the housing system and not the ones seeing housing as a human right. So I would just like you to reflect a bit more about this housing as a human right perspective.
And then I've been also quite, I've got feedback from researchers saying that you don't have to do much. You can go to Google and Google housing speculation, and you will get tens of thousands of results of the fact that it does exist, and it does push up the rents. But then we even have the commissioner a couple of weeks or last week in the MPOL committee here, and I asked him about the speculation aspect. And then he was a bit like, yeah. Well, it can be that it is there, and it probably is not there.
And the points of view from different people are very different. But we here should always be looking at the data, looking at what research says. And if we wanna do something to housing speculation, which we should really listen to the researchers, because this is not something that we made up. It is a real phenomenon that does exist. So maybe also your tools on tackling the housing speculation.
Thank you.
Speaker 11
Thank you very much for these excellent questions, and I hope I can respond in some way. There are many different causes of housing stress. We can see that there is a mismatch of where housing is and where it is needed. We're seeing a lot of the housing stock being used for other purposes beyond the idea of housing as a human right. So you inhabit, we fundamentally push the idea of housing as a human right because in that way, it obliges the governments as the rights holders and also the government then to be the responsible, to ensure that that right is actually achieved.
Speaker 12
And it places the responsibility on governments to create the policy environments, to create the financial pathways, and to create the safety net needed for those who the market can't reach. And I think what's happened with the last few decades of housing policies is that it's had the idea of enabling frameworks for housing, which in some ways has created housing markets and has created the ability for the private sector to have a larger role in the market. But unfortunately, it's also in some places meant that governments have sort of stepped away from the direct provision of housing. And it's very difficult now for some governments to bring back the funding needed, and we've seen the reduction of public housing stock and everything. So this is not just a phenomenon in Europe, but it's a phenomenon globally.
And I think there is a need now for governments to sort of step in and create a diversity of solutions. And, there's a need to understand what the market can do. There's a need to understand, have greater intelligence on housing needs because what housing producers are often selling is housing that they have always managed to sell. So they're looking at the market more than the needs. And I think there's the need for data intelligence, AI, to understand the differentiation of needs.
What are young people looking for? Are young people preferring to stay with their parents in the suburbs, or do they want to have a small house in the city? What about older people? What about young people? What about unemployed people?
What about key workers? So there's a much better need for proper data, proper analysis, and to understand what the housing needs are, and to create conditions to encourage, support, push the housing producers to respond to need rather than this idea of a market. Coming back to the chair's question about housing stress. Indeed, while some of the Europe issues of housing stress accentuated by things like short term rentals and other short term uses of housing, there's a there's a need perhaps to free up the housing sector in a way. That's not only by regulating short-term rentals, but encouraging new buildings or the reuse of existing buildings for the short-term uses so that the housing stock becomes more available.
But in other geographies, maybe less so in Europe, a major force for housing stress is rapid urbanization. And rapid urbanization takes place when people are moving from rural places and there's only a handful of cities that they can move to that are generating economies. So what we're finding is that major cities are growing extremely fast, faster than infrastructure can happen, and this is creating slums. What we're encouraging and what we're seeing some countries doing is to focus on small and secondary cities. I think even the European Union global gateway initiative, we have in play here, investment in corridors can create smaller towns, can create meaningful economic existence for smaller towns along those corridors so that they can take the stress off the major cities and bring in living conditions and economic conditions in smaller towns and cities where land is cheaper.
So there have been efforts outside of Europe, particularly African countries. Egypt, for instance, has been experimenting, have an interest in new towns. This is, some of these have worked well, some of have not worked so well. But the idea is that we need a greater diversity of human settlements and we need interconnectivity. So this is why housing should also be framed within the broader regional development and economic development landscape.
I'll leave it there, because I've probably spoken enough. Thank you.
Irene Tinagli
Okay. So thank you very much. I have no further requests from the MEPs. So I would be I oh. Madam.
Yes. Madam. Sorry. I don't have my eyeglasses. Okay.
Speaker 16
I have a number of questions. But first, maybe I'll begin with my observations. It seems that when we talk about this problem, we don't look at all of the variables in the equation. For example, the democratic explosion. We can't ask governments to take action and even sanction governments in certain cases.
I see that housing is being included as a human right, which would mean sanctions if governments don't respect their engagements. But we can't do the impossible. Population is increasing much more quickly than housing can be provided, and we cannot impose sanctions. So there might be some other negative effects also, which we can't take into account, with excessive concrete, excessive construction linked to the population increases and the flows of migrant populations. But with the increase of concrete all around us in our cities, this will undermine the environment.
There's a direct impact on the flora and fauna. We can see this also when there is a lot of rain. The earth can no longer absorb the water, and this leads to climate, to environmental disasters. So I would like more information from you when you said, for example, in Egypt, there are new experiences about the types of housing. Could you tell us more?
Why is the issue of demographics not taken into account? When you say that housing is included as a human right, it seems that certain priorities are being made. So when there's going to be a priority for a family with children, but then this means young people aren't a priority. And there's a major problem in Europe, because this can lead to major psychological problems for young people. There's also the issue as regards short-term rentals.
I'm saying that we may not necessarily have to regulate this, but perhaps we could consider it. Couldn't we consider, for example, in a given town when there is a shortage of housing, why not give a right to an owner for three years to rent out, and then that right would be given to someone else afterwards so that one person doesn't have an infinite right to rent out their property. And then a final point, we're constantly talking about inclusion, but also cohabitation in different populations in terms of age, and this is extremely important. But then at the same time, there's an excessive amount of social housing all concentrated in one place, and this is creating problems that we're actually trying to eliminate. I would have other follow-up questions, but I won't monopolize your time.
Really, I'd like to know about the environmental problems. We're saying we're trying to combat the effects of environmental change, but at the same time, we're putting concrete and buildings everywhere. So, could you give me your view on that? Thank you.
Speaker 12
Thank you very much. To respond in terms of the demographic explosion, we need to join the dots. We need to join the dots around economy, economic growth, spatial growth, and the affordability of housing. What we find in too many places is when the economic growth does not align with the inflation in housing, the affordability gap grows. And it is a very complex calculation, and this is why we need really very good housing data analysis in Europe that's able to join the dots between economy, spatial development, infrastructure, and housing affordability.
Speaker 11
Ultimately, we need to do, as I believe, need to strengthen, as I mentioned earlier, the role of smaller secondary cities or towns where housing is cheaper and to ensure connectivity and spread the housing demand across lots of areas as well as rural areas. We can see that, for instance, factories like IKEA were set up in quite rural areas and they can be productive areas, but they need the right sort of investment. But coming back to the question of short term rental, just to clarify, it does require a legislative framework, a European wide legislative framework. But it needs it's nuanced because it does affect cities like you mentioned, Lisbon, Barcelona in detrimental ways for the it compromises housing affordability. In some other areas, it supports the economic activities.
Speaker 12
And therefore, then there needs to be pathways for local authorities to determine how it suits them and to be empowered to deliver policies that are appropriate for the local impact of short term rentals and to provide that sort of the ability to then enforce that regulation. I think key to that also is the data needs to be available on short-term rental. I think in terms of cohabitation, I strongly agree with your points that you make about cohabitation and the need for mixed communities. I think loneliness is becoming a huge challenge for elderly people, but the idea of mixed age communities is really important and facilitated housing. And so that we have that sort of sense of social inclusion and responsibility.
I wanted to pick up on your point about environmental sustainability. And they say in the same way as an underlying principle in UN Habitat, we support the human right to housing. We also, as an underlying principle, support the idea of sustainability. How that plays out is a lot about urban planning. On one hand, we need cities to be compact, and we encourage densification where needed.
And this also requires a shift in the way people think about housing because a lot of people think of housing as your four bedrooms, your garage, your garden, and there needs to be a shift in the way people think about housing in order to prevent the sprawl that comes with it. But also with densification, because it's also a challenge, because then you talk about the concrete, and we need to look at how to bring nature into cities. And I think this we instead of only just compactness is important, and that prevents us sprawl into rural areas, into areas of biodiversity, and into areas of agricultural use. But at the same time, we need to find ways to bring nature into buildings and also bring nature into the construction of buildings. So I think there's a huge amount of innovation needed, but we very much support the directions taken by many European countries on this idea of no net land take.
And I think there is an adequate design and innovation. We do hope that is possible. Lastly, on social housing, all in one place. We really believe in the social mix. You know?
And I think this is super important because we can find, if we're just looking at metrics such as a house and access to services, access to education, access to health, access to transportation, that that doesn't stop the problem of just homogenous areas of social housing where the children go to school with children who are in the same situation as them and might not, you know, are not exposed so much to other societies where people are working, where people are able to be motivated and to move into and to improve their social situation. So a social mix is really super important to enable people to move out of poverty and to mingle with different classes, sectors of society, and we encourage this very strongly in open planning principles.
Irene Tinagli
Thank you. Thank you very much. So now, before closing this exchange of views, I give the floor to a short intervention to the European Commission representative. We have, mister Sergio Oliete Rosa, head of unit, sustainable transport and urban development, DG Intba.
Thank you.
Speaker 17
Thank you, Chair and honorable members, colleagues. From the European Commission's perspective, we would like to emphasize what the UN Habitat executive director said about the fact that the housing crisis is a global issue too. The EU, its member states, and the European Commission are the largest donor of UN Habitat, and we have been contributing to shape housing policies for many decades around the world. The new EU agenda for cities has an international dimension aimed at connecting European cities with global partners and advancing international urban standards. And as we have heard from the discussion today, housing is part of the broader perspectives of urban development as a driver of economic transformation, connectivity, and inclusive growth, key priorities under the EU global gateway.
Speaker 18
As you know, the global gateway is a strategy bringing together a response to our partner countries in terms of economic and social development, with the safeguard of EU strategic interest and promotion of EU competitiveness. So we recognize that access to adequate and affordable housing is a challenge in Europe, as in many partner countries. Under Global Gateway, the EU invests in cities as engines of growth, linking them to regional and global value chains. And our focus is on production, job creation, and sustainable infrastructure, where housing plays a central role, because these investments and growth cannot take place if people do not have decent living conditions. So in conclusion, we welcome the link UN Avita does between the EU affordable housing plan, the rigorous research, and its willingness to share globally the solutions promoted through the EU plan, and the UN habitat role as broker for an exchange of sustainable housing practices with the rest of the world and facilitate the dialogue.
Thank you.
Irene Tinagli
Thank you. Thank you very much. So now we conclude our exchange of views on the between the committee and the UN Habitat. I think it's a very good opportunity to better understand also UN Habitat's role and priorities in addressing housing challenges worldwide. And this perspective is very much aligned with our work here.
So I really think that we might be able to have also a future fruitful cooperation. So thank you very much for the availability, and we move to the next item in our agenda, which is the exchange of views with Matthew Baldwin, head of the commission task force on housing, on energy price increases and their consequences on housing affordability. So, I'm very pleased to welcome Mister Baldwin, you know, whom this committee knows very well. We have had the opportunity to exchange with him on several occasions, since the establishment of the task force, and he's been a key interlocutor for our work throughout the preparation of the committee's reports and beyond. So today's exchange focuses on a matter that is both urgent and directly relevant: the committee's mandate.
As colleagues are well aware, the conflict in the Middle East and the effective closure of the Strait of Hormuz have triggered a major energy price shock, with European gas prices rising by approximately 60% since the onset of the conflict. President von der Leyen has herself underlined, during our last plenary sitting, that the first 10 days of the conflict cost European taxpayers an estimated €3,000,000,000 in additional fossil fuel imports. The energy shock has a direct and significant impact on the housing sector. Rising energy costs on households' budgets increase the cost of heating and exacerbate energy poverty. The European Council of March 19 took note of the immediate impact of the conflict on energy prices for European citizens and called on the commission to present without delay a toolbox of targeted temporary measures.
So this is a message that resonates strongly with the work of this committee, and I would like, therefore, to invite mister Baldwin to present at a task force and commission's assessment of the situation and, in particular, how the commission intends to address the impact of rising energy prices on housing affordability, both in the short term and through structural measures. Mister Baldwin, dear Matthew, you have the floor for 10 minutes.
Speaker 19
Dear Madam Chair, thank you very much for your very kind remarks. You really have made the house committee feel like home to those of us in the housing task force and the commission. Many congratulations to you and the committee for successfully piloting the report, which is voted through. So I'm really looking forward to the next stage of our work together with this committee, and it's a pleasure to be back here. And thanks for asking me to come and say a few words about this, actually reflecting my former life as a deputy director chairman of DG Anna responsible for another task force relating to repower and getting out of Russian gas back in 2022.
So it all feels eerily familiar. I will spare you, and you've summarized it very well, madam chair, the current situation about energy prices since the start of this crisis in the Persian Gulf. It's clear that oil and gas markets are reacting to the disruption of shipping through the Straits of Hormuz, which is a key corridor for around 20% of global oil consumption and LNG trade. But if I may just say, significantly less for the EU, around half of those numbers, 7% of EU oil imports, 8% to 9% of EU LNG imports are passing through the Strait. I haven't checked the numbers this morning.
I gathered the oil prices went back above $100 per barrel, which is a 40% increase since the start of the conflict. And as you've yourself commented, madam chair, European gas prices have sharply risen as well since the start of the conflict. The commission is very much on this. We are in constant exchanges with member states, through the energy union task force. Task forces are very much the order of the day.
Through the oil coordination group and the gas coordination group, it's clear that the member states' emergency stocks are filled, and we are very much prepared in case they need to be used. Member states were able to join the International Energy's proposal for collective action to release more than 400000000 barrels of oil to the markets. But, of course, the commission continues monitoring and assessing the situation, and will assess the overall security issue for oil supply in case of a prolonged disruption of energy flows. But just to repeat, at this stage, we see no immediate threats to EU energy security. The need for continuous engagement is absolutely clear.
We're stressing the need with member states for solidarity, for coordination, and transparent exchange of information, which is why the oil and gas coordination groups are so important, and are meeting on a weekly basis, and why it's so important to have these direct and regular exchanges with member states, with the International Energy Agency, and all sides of industry and stakeholders. Now this is important because should things get worse, we need to be prepared to address both energy security concerns and, of course, the impact of the conflict on energy prices. We believe that we can draw from the toolbox that we have. Member states as well as the EU can already draw on existing measures that help mitigate the supply risks that materialize in the future or could materialize, and those impacting prices on our economy. A number of these actions build on the measures outlined as part of the EU and national level responses to the 2022 energy crisis.
But we stand ready to support member states in activating the flexibility in the gas storage regulation to avoid refilling storages at all costs. This can help reduce the overall gas demand. It can alleviate pressure on prices. You mentioned our president, madam chair, in the European Council last week, president van der Leyen presented different policy options to the European leaders to tackle high energy prices, including measures for immediate electricity price relief to the most effective energy-intensive industries through the state aid framework, and also for the possibility for member states to adopt national measures subsidizing or indeed capping gas-fired generation and redistributing the infra-marginal revenues. And the commission stands ready to support member states in all of their efforts to avoid internal market distortions, to preserve the important long term investment signals for clean energy, and preclude excessive additional demand for gas.
And at the European Council, she also stressed further need to act on the four different components of what make up our electricity prices. And as follow-up to that European Council discussion, we will be continuing to reflect on what additional targeted temporary measures may be needed. As we look forward, it's very important that we think about our long-term objectives. The clean energy transition for Europe remains absolutely crucial for maintaining our competitiveness, for maintaining our strategic autonomy, particularly in response to the currently shifting global dynamics. Nothing changes.
We need to continue to mobilize all our tools to deliver a cleaner, efficient, secure, and affordable energy system in Europe. As part of that, and I'm now starting to get to the impact on housing, and apologies, but I wanted to deliver a bit of a general message on where we are on the energy prices. This affordability theme, which, of course, we've discussed many times in this committee, is every bit as important on the energy side. Indeed, you will, of course, be aware of the European affordable energy plan, which came out in February 2024. As part of the ongoing rolling efforts to secure affordability, we came on March 10 with the citizens energy package aiming to give consumers easier access to cheaper and sustainable offers that better suit their needs, making it easier to switch energy suppliers.
By making this switching simpler and faster, consumers can choose better offers and save a significant amount of money per year. And this speaks to the coexistence, the cohabitation of both energy and housing poverty. If you're in a place where you can't afford to pay the rent or you can't afford to pay your energy bills, it makes little difference to you. You're in poverty. You're in a situation, a place where you're living, which is becoming unsustainable.
So these are really two sides of the same coin, which is why when we talk about affordable and sustainable housing, it's very important to remember the energy efficiency component, which is very much central to our work. Turning now directly to the impact of what higher energy prices mean for housing. I think there are some issues which pose a direct impact, and there are others which will have an indirect impact. And maybe just to kick off our discussion by looking at those. The direct impact, as I've just said, is part of the impact on overall citizens' disposable income.
It's immediate. If you go to the petrol station to refill your car or you pay additional energy bill costs, that is impacting your disposable income. It may become more visible over time once and if you're getting your energy invoices on an annual basis, then we'll see that impact. This, in turn, reduces overall affordability. It deepens energy poverty, in particular for vulnerable and low income households, excuse me, who are forced to spend a higher share of their income on housing and energy related expenses.
In addition, energy prices have an indirect effect on housing. We've seen construction costs already increasing more than inflation in recent years. This is a very familiar topic to this committee. The productivity stagnation in the construction sector is endemic. If I just check the prices, construction producer price index, excuse me, for new residential buildings rose by more than 33% compared to 27% on an overall basis for the last five years.
So it's even now still rising faster than the general inflation. We know that key construction inputs like concrete are very energy-intensive. We know that transport or construction material is a significant cost factor. All of this means that construction costs are likely to be driven further up. Since the beginning of 2021, the price of most building materials has increased.
These typically account for up to 40% of the total cost of building a home. If you exclude the cost of land and you exclude the cost of infrastructure, these are a big factor in overall price increases for new build and, of course, also for renovation. The sharp increase of the price of construction products has been driven in the past by supply chain disruptions, but, of course, also now directly by high energy costs. If this continues for much longer, these direct and indirect effects risk weighing in turn on housing investment, decisions to build new dwellings, but also, of course, to take vital renovation efforts, and thus, again, in both sides, reducing our housing supply even further. So what can we do?
Of course, we can do everything we can, and you have seen what the International Energy Agency has said. Our personal efforts, our societal efforts to save energy, I think that's clear, particularly in relation to energy-saving investments in our housing stock and building low-energy properties going forward. Again, the complementarity between what we're trying to achieve in affordable and sustainable housing. Therefore, we were very pleased, madam chair, in the report of the house special committee on the housing crisis, how much the parliament has stressed the importance of social climate plans, which are vital if we're going to support renovation, which will be vital if we're going to monitor closely the progress which is being made in each member state in preventing energy poverty. We're working very closely with member states on the development of these plans, whilst the European Energy Poverty Hub supports European local governments to eradicate energy poverty and accelerate the Just Energy transition.
Last but not least, again, we are actively working to support the implementation of renovation measures in the member states, and you've seen the specific actions we proposed in the affordable housing plan. We'll support member states through the new partnership for better homes, for one-stop shop services for the renovation of housing, as part of an overall support package for financing energy efficiency. And last but not least, through support in developing national building renovation plans. And if I could just leave one thought, it's about empowering citizens, households, and communities as well to produce their own renewable energy, to help them save on their energy bills, to help them generate benefits which can be shared with their neighbors in an energy community, which is another reason why we're very keen to support energy communities with practical tools in the energy communities action plan. Sorry if I was a bit long, Madam Chair, but I wanted to explain the general situation, which I know is relevant to this committee and the Parliament as a whole, and to start our discussion about the impact on housing.
And I'm very keen to have this discussion. Thank you.
Irene Tinagli
Thank you very much. Now I give the floor to Gavi Bischoff for the S and D.
Gabriele Bischoff
Yeah. Thank you, mister Baldwin, for being here and also mentioning, indeed, we had a lot of exchanges, but we are now going into a new phase as plans become action. And I think that is very important because, as you already mentioned, we are running out of time here. So I have a couple of questions. I also saw with interest the conclusions of the European Council.
I listened very carefully also to the toolbox, and maybe also that we need additional measures of the current toolbox. But I didn't read anything in.
Gabriele Bischoff
Conclusions or, heard about windfall profits. Because I have to say that very worker citizens are really worried because they already had problems to make ends meet. And now on top of this, we can see that in many member states, we had huge increases that were not even justified. In some member states, measures were taken and others were not. But I think if we want to keep energy prices low, we also have to address this question.
And I was wondering, and my other question goes into the direction you mentioned on we really need a booster for energy efficient housing, and especially for people with low income, for social housing, for nonprofit housing because there are the people mostly that don't have very high incomes. And how does the commission link this with the simplification package? Because, really, if we want to be not only more resilient, but also address this, we really need a booster here, link it to the simplification package to have better energy efficiency, and get rid of fossil fuel here, and how the commission will integrate this. And I think we also have to link this simplification package with the EU funding in the next MFF, especially on this topic, because this will be very important. And my last question I have, as we are now in this new phase, also, in the debate, before it was addressed short-term rentals, everyone is looking at what kind of solutions will Europe take to address it.
So my question is, when can we expect the legislative proposal? And also, if you could highlight a bit what would be in it because, as I said in my introduction, we are running out of time. We delivered our plans. Now we have to get into action. Thank you.
Matthew?
Speaker 19
Thank you very much indeed, Missus Bishop, for your kind remarks. Indeed, I very much agree with you in a new phase. It is very different from writing a plan or indeed preparing the report to implementing it. And I'm really pleased that the European Parliament, and this committee in particular, are continuing to follow the implementation with determination and strength. And you've rightly referred to the ongoing work to implement the conclusions of the European Council and to look into the different toolbox of the measures.
And, I think we've got most of the measures we can use to address the crisis, but we're always alert to what needs to be done. Thank you for your remarks also about the importance of the simplification package, which, of course, is important from the perspective of rolling out clean energy, of course, across the European Union. And, of course, we also know how important simplification, and I stress not deregulation, simplification, will be in terms of addressing the housing agenda and looking at the unnecessary obstacles. So maybe just a word on that from the perspective of housing. We will begin this year with a mapping exercise, looking at the combined impact of European legislation on housing and different initiatives on housing to really do as much as we can to assess the potential for that.
That'll take some time. It's a complex process. And at the same time, we will also be working with member states, and with cities and regions. We've had very good workshops with them both this week about their efforts and how they can support the simplification efforts at the national, local, and regional levels. In a sense, what we need is a really joined up conversation to look at how what we are doing at the different levels of government may be unintentionally impeding the rollout of both energy efficient homes and affordable homes.
And I think that's very elemental to our work going forward. You'll forgive me if I don't answer directly your question on the next MFF. I know how important this is going to be for housing. We're very pleased. We've got a number of strong hooks in the legislation, the proposed legislation on the next MFF.
Those negotiations continue, and it will be very important, I think, for the.
Speaker 19
For the commission and the parliament working together to continue to make the case for housing in that backdrop, but, obviously, we're a long way from final decisions as to how it will work in practice. And lastly, you asked about short-term rentals, and I very much understand this committee's strong interest in that and what kind of solutions we can bring going forward. It's a major priority for the commission, major priority for my commissioner. We've indicated in our commission planning that this will come forward in the second half of the year. All I can tell you is that my commission is urging us to produce this as soon as possible.
So we're working very much day and night to prepare the legislative proposal. We're calling the Affordable Housing Act, and we very much agree with you on the urgency of this matter, and we're taking it forward just about as quickly as we can. Thank you very much, Mrs. Mitchell.
Ciaran Mullooly
Thank you, chair, and thank you, Miss Baldwin, for being with us today. It's because your presence shows the magnitude of the crisis we see in front of us. Colleagues, we're once again faced with a reality, I think Europe knows only too well at this point. When energy markets are destabilized, it's the households who pay the price, and housing affordability lands squarely on their shoulders. So since the outbreak of the war in Iran, we of course have seen a major supply shock.
Around 20% of global oil and LNG passed through the Strait of Hormuz, and disruptions there have already taken a clearly major surge in oil markets. Prices climbing well above $100 per barrel, an increase of over 50% since the war began. Measures taken in my own member state of Ireland do little to cushion the blow. These were the choices given by the commission last week when the commissioner, Diane, said to each member state, you change your taxes. You bring down your excise to deal with this situation.
Well, in our member state, a proposed excise duty cost on diesel by 15% on petrol due to come in tonight, we'll do little in my opinion to help the affected households and construction companies, some of whom are currently paying up to €2.30 per liter for diesel. On the fuel front, however, it appears we will see nothing done on the actual cost of home-heating oil. Home heating oil has doubled in price in recent weeks, alongside large increases seen in electricity and other energy sources. Now, Jerry, I have to say at this point, as we look at the effect on housing and construction, I don't think it's alarmist for me to say that this crisis has the potential to send us into reverse in construction in Europe. I don't think it's alarmist to say that.
A few weeks ago, we had a builder construction company operator of Marlin, called Michael O'Flynn, in this chamber. He gave evidence in terms of what was required to boost confidence in the industry. Yet at the weekend, he now says he has paused signing any new fixed contracts for housing developments until he can get some indication of a timeline for when the war in the Middle East will end. He stopped, not signing any more. We see this as not only an energy crisis, but therefore, as a crisis of affordable housing.
And as early as January, building suppliers of micro constituency were increasing the cost of their products. So I say this crisis began actually in January when those costs began to raise. I brought an invoice with me this morning. My local construction company sent this out in January. The increases, products increased by a minimum of 2%.
Some of them as high as 14% for the basic ingredients of construction industry. Cement went up by, in that time, to €12 per ton. This was sent to all the suppliers. System of the problems began. So, as you know, colleagues, higher energy prices inevitably feed through into inflation.
And you will know, chair, that economists warn that this crisis is no different. It's likely to push inflation well above our target of 2% and potentially force us to revisit our interest rates. It's coming. So the lesson is clear. Energy affordability is housing affordability.
When energy prices spike, tenants struggle to pay rent, and homeowners struggle to pay mortgages, and this is why I believe our response cannot be short term or indeed reactive. To mister Baldwin, I'd like to ask a number of questions. And you've touched on some of the answers, but if we can get more specifics, if possible, I'd like to know what immediate measures the commission is prepared to take to shield households and construction companies from energy price spikes around the member states at the moment arising from the geopolitical shocks like the current crisis. And there are some real things we can do to you. We might not like to do them at this point in time.
We might not say it is preferable, but we have industries going out of business. You know, if C band, carbon the carbon border adjustment continues, that's responsible for these increases. Our and national member states have carbon tax. I'm not against the principle, but at this time, these are the prices putting construction to a halt. So I asked the commission, do you accept that based on the testimony of people like mister O'Flynn, that energy affordability is now directly driving housing unaffordability?
And how has this been reflected in our EU policy coordination? And then finally, is there scope for temporary flexibility in EU fiscal or state aid rules to allow member states to intervene more decisively in energy markets during the crisis? Thank you.
Speaker 19
Thank you very much for mister Muluri for bringing our attention to these issues, and I can feel your passion and your concern. And I those feelings, I think, are shared right across Europe. It is for consumers and for companies alike having faced this crisis, in 2022, and battle through it now to face it again three years later is a terrible pain for colleagues, to have to go through this. And I think, you know, the commission very much understands and recognizes that. Again, I think looking at the long term, as you rightly said, we do need to underline the importance of energy-saving investments on our housing stock.
I mean, that issue doesn't go away, and I know you support that. And that's why it's very important that we take for the work through the social climate plans to support the ongoing renovation. It will be paradoxical and counterintuitive to turn away from those efforts exactly at this time, when we're facing such huge pressures. These are ongoing things which we really should maintain. The question about what we do, whether we should intervene further to reduce prices for households and SMEs, of course, that requires, for example, in the electricity sector, an electricity price crisis to be cleared by the council as one of the ways to protect consumers.
But there are measures which we can take in already. Member states can take a number of measures that are of direct relief in the case of new high prices using energy vouchers, reducing taxes and levies, and indeed the citizens' energy package looks at a number of these. We have to be careful because it's also at the time when we need to try to dampen down our consumption. Artificially reducing prices to lower levels can have the paradoxical effect of actually, you know, driving consumption forward. So you've got to find the right balance in all these things. They'd reduce demand-side flexibility.
They reduce incentives for energy efficiency. They undermine competition to the long-term disadvantage of consumers. They also contain very significant costs for member state finances, which we also know are under pressure. So, it's about finding the right and balanced approach, mister Mulli, I think, in tackling this. Thank you.
Irene Tinagli
Thank you very much. Now I give the floor to Vincent Marza for the Greens.
Speaker 27
Thank you very much. I'll be speaking Spanish. So put on your headset if you need it. Well, thank you very much, Mr. Baldwin, for coming here today. And I think it's particularly important, as you were talking about this global context that we find ourselves in, that we're particularly vulnerable to the increasing price of fossil fuels.
And this is something we've been speaking about in our group for years or decades. In fact, we've been calling on the European Commission and member states to come up with a specific plan to reduce our dependence on fossil fuels, not just because of the effect this would have on climate change, but also for our independence on a daily basis for our citizens. And in our case, access to everything that we need in our daily lives, for example, energy. And so we've seen this in Ukraine's in the aggression of Russia against Ukraine. We've seen the effect that this can have, the effect of the attacks made by Israel and the USA on Iran.
This creates higher prices, but it also means they are more dependent on other actors. So we have always been saying, and we will continue to say, that we need to move forward in increasing our use of renewables. We have to continue working on reducing our dependence on fossil fuels, and also that there should be limits on certain forms of energy, because those are in sectors where they're putting their own needs and their own priorities ahead of the needs of our people, and this is leading to increased prices. So for this package that you presented, we think that this needs to become a specific legislative proposal as soon as possible, specifically to reduce the costs of energy in housing in the various European cities. And so we think that there are two areas we need to focus on.
First of all, there's the structural side of things, and then there are more immediate issues. As regards to the structural side of things, we need a model where we can be producer and consumer and that this consumer consumption will be reduced. So this will mean that funds from the commission, from the European Investment Bank, and so on, and that affordable housing. All of this would have a societal, a social aspect, and an environmental aspect. And only if these funds are used to build housing, which are more energy efficient and less dependent on fossil fuels, only in this manner can these funds be used.
That's the way it should be. It shouldn't be going to serve the benefits of large companies. We also want, as a number of member states have said, to continue their reduction of energy supplies to vulnerable homes. Vulnerable homes should not have their energy supply cut off, and this is the basis of our green social policy. So I have a couple of questions.
Does the commission plan? How does it plan on ensuring that vulnerable families won't face excessive burdens regarding energy prices? Or is there any way you can reduce the huge benefits, huge profits that are being made by the energy companies? Now secondly, how can we ensure greater transparency, as the point raised by my colleague, Kieran Malouli? The prices of construction products have increased very much.
And so how can we ensure that there will be greater autonomy in this sector, and so that our citizens will be able to have affordable housing. We need to move. We need to take action. We need to act in a structural manner so that we aren't going to be dependent on fossil fuels, and we really need to work for clean energy, which is produced here and which will not worsen the problem of climate change. Thank you.
Speaker 19
Thank you, madam chair, and thank you, mister Mazza Ivanhies, for your points. I mean, as a general rule, as a general approach, we very much agree with what you said about the need to improve our energy autonomy and to improve our independence. This is a common theme back from 2022. And, of course, the energy that we can produce and consume here is very much in our hands. That said, it is a very different crisis, this one in 2022.
Our level of dependence on gas and oil, as I said at the start, coming through the Straits Of Pumuz is much less than in the situation that we confronted in 2022 with gas coming in from Russia. But the point remains, and it's very important that we, if faced with this immediate crisis, keep our minds very focused on the need to advance with what we've been trying to achieve over the last few years in terms of continuing to green and clean our energy supplies, producing more of our necessary energy domestically and, of course, through sustainable methods. And these things are very important and will and should very much continue. I didn't pick up one of the points that Missus Bishop, you made about whether we should be introducing windfall taxes, you've reiterated that point. So let me say a word about that now.
We understand the concerns. We hear loud and clear the calls for that. It's a major step to take, and our sense at this moment is it's not yet the right time to take measures to step into this. But this is something that we remain ready to address or to ready to consider as if and when this conflict continues and if and when prices continue to evolve in a difficult way. What you said about the protection of vulnerable consumers, of course, is very well understood.
And this goes back to the remarks I made at the start about the need to address the twin beasts of energy and housing poverty. And I know that this is very close to the mind of member states, and I think member states will be very cognizant of the need to protect vulnerable consumers at this time. And, again, these are things that we have proposed, through the citizens energy package, through the energy communities package. And the remarks you made about the need to empower consumers as well to produce and sell and use their own homegrown energy are well, are well taken. We're backing energy communities.
We're backing self-consumption. And some interesting numbers, households are producing and consuming their own solar energy. If they're doing that, they're achieving savings of between €250 and €500 per year. For households with a mixture of wind and solar energy and organized in the community, it could get up to 1,000 euros per year. These are serious numbers faced with the current crisis.
And these things which maybe once upon a time felt like whims or fads or local issues are producing real energy savings and are worth considering. Thank you.
Irene Tinagli
Okay. Thank you. Thank you very much. Now I have a request for the cash DI from Missus Sorel. Missus Sorel, you have one minute for your question.
Speaker 16
Thank you. Now you mentioned that the commissioner is under pressure because of the plan that you want to table to regulate short term rentals. Could you tell us what the nature of that pressure is, and where the difficulties lie? Now then, on energy efficiency of buildings, now in certain countries, the fact that you concentrate on energy performance means that you're excluding from the housing market a significant part of the housing stock. Now you say that increasingly there's a lack of available housing, but there are certain owners who don't have the money to upgrade their buildings, and therefore can't let them.
You know, we all agree on the ambition of energy independence, but you don't achieve that overnight. And I think you said that yourself. And, of course, you know, certain policies have killed off car manufacturing. I hope that we're not going to have a similar sort of heresy here. We'll have to see what our engineers can do, and then take it from there rather than go about it the other way around.
Then on solar, again, I agree, but it makes us dependent on China. They're the ones who produce the solar panels and other components. So why replace one dependence with another? Thank you.
Speaker 19
Yeah. Thank you very much, madam Sorel, and keep your comments. Yes. And maybe I wasn't clear enough on the short term rental point. I said that I and my colleagues in the task force are under pressure from the commission, from my commission and my boss, to come forward with and to bring forward that package as soon as possible.
We've heard the urgency underlined from a number of sides in this committee about the importance of tackling these issues in the Affordable Housing Act, and all I can say is that we're working extremely hard to come forward with proposals as soon as possible. On the questions you've placed on energy performance and the building stock, I do recognize what you've said. We need to think creatively about how we can use our existing building stock to the best effect. One of the numbers that we've been looking at in this committee, and also in the task force and the commission, is the number of vacant buildings. So I think the number across Europe is 20% of vacant buildings are functionally vacant, and we need to take a hard look at this.
It's interesting to hear the different explanations which are evidenced for why this is going on. I think we need to listen to all sides. But, clearly, if we just focus, I'm going to the problem of new construction right now. If we just focus on new construction to the exclusion of everything else, we won't be maximizing our abilities to produce affordable housing for all. So we need to think about repurposing. We need to think about densifying.
We need to think about addressing vacant buildings. And there are lots of different solutions and a lot of these issues lie, of course, in the hands of member states whose competence this is, but we are very ready and willing to look at that. I hear what you say about the cost of renovation, which are, of course, as in costs of construction, these are also rising and they need to be contained. And we need to try to find ways of helping owners continue to renovate their houses in a pragmatic way moving forward. But the energy savings which result the support for disposable incomes that results from these and these things really cannot be ignored.
And we really need to try to help consumers and house owners continue with these efforts. I also hear what you say about the dependence on other countries for components, and that, of course, is true. But once our solar panels are here, no one can flick the switch on those solar panels. No one can prevent those wind-type turbines turning. Those remain under our control.
And I think that's why Europe and so many other parts of the world are embracing the clean revolution to support their energy security, of course, as well as their energy affordability and, of course, to address the climate crisis as well. Thank you for your remarks.
Irene Tinagli
Okay. Thank you very much. I have no further requests for the floor. So I really want to thank all the participants in this debate and Mr. Baldwin for the usual availability to answer all our questions.
We know that this is a topic that, of course, will continue to be on top of our agenda, and so we will surely have to, you know, follow-up on that. This is really an issue for millions of Europeans, and rising costs of living and housing in particular. So we will keep monitoring. And so also that the public consultation on energy efficiency is open, so that is also an important step to follow up. And actually, as I announced also, the coordinators have decided to organize a public hearing on this subject as soon as possible, with an invitation to Commissioner Jorgensen.
So today's exchange will serve as an excellent basis for preparing that hearing. So thank you again to everyone, and we can close the meeting now. Thanks.
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