Affordable Housing – The Bulletin Interviews Dr. Steffen Wetzstein

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Interview by Shaheera Syed

Funded by the German-based Fritz Thyssen Foundation, Willy Brandt School research fellow and lecturer Dr. Steffen Wetzstein currently explores the public policy problem of decreasing urban housing affordability in many larger and growing cities around the world from a comparative international perspective. The project titled “‘Affordable housing’ crises in comparative, political-economy perspective: housing governance, policy innovation, political tensions and investment outcomes in four national urban centres” seeks to understand why a growing number of international cities face increasing shortages of affordable housing for its low and medium income residents, what the effects on people, communities and places are, how policymakers respond, and how successful those interventions are.

Dr. Steffen Wetzstein

Dr. Steffen Wetzstein is a Human Geographer with research, teaching and consultancy interests in economic governance, urban/ regional policy development, business political representation, political economy and globalization. He holds a PhD from the University of Auckland, New Zealand. He draws on more than fifteen years of professional experience in academic research, teaching and policy-focused work in New Zealand and Australia based on positions as Policy Analyst in Local and Regional Government (Auckland; 2001-2004), Lecturer in Urban and Economic Geography at Victoria University (Wellington; 2007-2009) as well as Assistant Professor (Human Geography) at the University of Western Australia and Researcher for Business Think-Tank ‘Committee for Perth’ (Perth; 2009-2012). After returning to Germany he worked as Professor at a University of Applied Sciences in Erfurt and has also been teaching regularly across all leading higher education institutions of this city.

The Bulletin: How did you begin working on the affordable housing project?

Dr. Wetzstein: In 2014, it had become obvious that affordable housing was a real emerging problem and that is when I developed this project. There is a missing link between the need for housing and its subsequent provision. Not everywhere, but in a number of cities social housing is absolutely inadequate. In some cities, the issue has reached a crisis level. This is where, I think, based on my past experience and by visiting stakeholders across different cities around the world, I can make a contribution in the form of a qualitative comparative research study.

Where do you see the ‘affordable public housing’ in the international political agenda of policy makers and politicians? Has the phenomenon received some increased popularity in the last few years?

I believe that affordable public housing is on the agenda of most governments. However, merely acknowledging the problem doesn’t really solve it and that is where the actual problem rests. Politicians talk about affordable housing often and the media also picks up on it but in terms of material change that has some measurable impact on people- there is still a lot to be done. The results of my research also corroborate this notion that we are not doing enough to address the problem of affordable housing.

What are some of the problem areas that stop the politicians from acting upon this issue, which affects everyone, and is seemingly very popular with the general population- how can the gap be explained?

You are absolutely right that housing is a subject that affects everyone, and so everyone has an interest in it. I can point towards two main issues that can explain this gap, however, at the same time I do not want to oversimplify this complicated issue. Firstly, in western countries we have a problem with regulation- we find it very difficult to regulate private capital. One can argue that it is not the job of private sector to invest in affordable housing and I tend to agree with that notion in high-demand housing markets. I see the current problems primarily as governmental failure and the situation has gotten especially worse after the global financial crisis since governments – by large – spend less on housing and are more ineffective in regulating private capital. Secondly, there is problem of political will. Not in every country do you see politicians interested in helping those who need it the most. We see huge differences in the living conditions – from people living in million dollar apartments and mansions to people who are homeless or have to commute long distances. Even in Germany, which is deemed to be a key European power when it comes to social equality and welfare, we expect to have 500,000 thousand homeless people by 2018. When you go to other areas, Auckland in New Zealand for example, we see an exploding number of people and families, even if employed, living in their cars. Then there are issues relating to insecure private rental tenure arrangements especially for young people in Anglophone countries and you really see the lack of political will and action to tackle the issues at hand.

Which parts of the world are focusing more on the concept? Are there any model cities that policy makers should look at?

Best practices can be found in a number of cities around the world. There are the classical superstars that have done well in the last century. Here in Europe, Vienna serves as a very good example since it started to work on delivering affordable housing to people through its own organizations as early as the 1920s. In recent years, they have been spending a lot of money on customized housing, smart housing for younger ones and initiatives that are being more responsive to the individual needs of the people. This doesn’t mean that these policies don’t have negative effects as well. We have the example of Singapore which is deemed to be a leading model in Asia. While a young Singaporean family can access affordable housing and not pay more than 25% of their income, at the same time outsiders and migrants are left out of the system and are forced to rent privately, which is very expensive. Similarly, France has a good model of social housing. Ireland is also very ambitious and the political will seems to be there to invest in affordable housing these days. In Germany, Hamburg and Munich are good examples of the more cooperative partnership model on land and infrastructure development. Though I think developments in Berlin are the most interesting but also most concerning in Germany at the moment as we are seeing a radical change from extremely affordable housing to very expensive housing and people even being evicted from their houses. However, I believe that you can’t easily replicate an exact model; that would be unwise. Hence, we need city-specific policies in accordance to the local needs.

Do you think this is a top-down or a rather bottom-up process i.e. does the government need to decide that it is going to invest in affordable housing for the next five years or can the local populace build enough pressure to force the government to respond?

That is a very important question. We are still struggling to find an answer to how actors at different levels can collaborate to resolve the problem. I recently came back from Brussels and many stakeholders say that affordable housing is a primarily nation-state issue. Despite that, the EU has increasingly recognized its role and responded by launching a pilot project last year called the EU- Urban Agenda, in which housing is given significant importance. On the global level, we have the New Urban Agenda- Habitat III by the United Nations but the implementation of this agenda is a big question mark. Even at the local level, we have the ‘right-to-housing’ approach where people are increasingly demanding appropriate and affordable housing as their basic human right.

Can you shed some light on the possible means of financing the project of affordable housing- does a social welfare government model work better or alternatively, how can we incentivize the private sector to invest in this area of development?

We have different visions on this issue but there is no consensus. One very powerful voice in this area is the international consultancy firm McKinsey- two years back they provided the leading blueprint for tackling affordable housing problems. Since it is a private organization, it looks at the issue from a very particular perspective and only provides half of the solution. There are voices that advocate for public co-operative land development i.e. cities should reserve land for affordable housing arrangements. We also have more bottom-up approaches like group housing where people team up with architects and engineers to build affordable and nice housing. Cross subsidization is another way where the private sector is required to allocate 30-40% to affordable housing which in turn, increases the housing prices for others. However, these models – in isolation – fail to deal with the magnitude of the problem. Meanwhile, it has become increasingly difficult to secure loans and credit from the banks for those households without assets or solid, regular income. As a result, only the rich can buy property and increasingly become landlords of multiple units

A common misconception is that the affordable housing is synonymous with low-income housing. Can you clarify the difference for us?

I personally think that it is not very useful to separate social and affordable housing. We need to re-conceptualize the idea of affordable housing and within it locate social housing along with other forms. One of major issues is that according to the EU legislation, the governments are not allowed to build social housing for all but only for a small segment of the population that absolutely doesn’t earn enough. Now this is a definitional issue and there has been an interest to change the legislation, since how we define issues and build concepts in our heads affects our political responses towards these challenges.

Can we expect to see some global action designed to cater to the problem of affordable housing like we saw in the case of climate change and COP21?

I like the way you compared this initiative with COP21, it is an interesting way to look at the issue. I believe we should make a similar case for housing and aim towards generating a similar momentum. I know that this task will be much harder, since there are tons of vested interests, however, it is possible.

If you had to put a year on it, when do you say we can achieve this goal of affordable housing?

We have the example of countries, like Singapore, that turned things around in as little time as five years, so being ambitious, I’d say that the goal of affordable housing is achievable by 2025 – if governments, elites and societies at large really prioritize affordable housing for all, and courageously execute around this issue.

Follow Shaheera Syed:

Shaheera Syed is a second year Master’s student of Public Policy majoring in conflict studies at the Willy Brandt School. She has completed her Bachelors in Public Administration from National University of Science and Technology, Pakistan and has worked for a number of organizations, ranging from World Wide Fund for Nature to the United Nations. She has also written for various newspapers in her home country and plans to use her experience here, since she loves writing almost as much as she loves talking about politics.