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Over-indebtedness The housing perspective

Over-indebtedness The housing perspective Workshop: Household over-indebtedness in the EU in the context of the crisis, the way forward Brussels, 6 December 2011 alice.pittini@housingeurope.eu. Housing bubble at the heart of current crisis.

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Over-indebtedness The housing perspective

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  1. Over-indebtedness The housing perspective Workshop: Household over-indebtedness in the EU in the context of the crisis, the way forward Brussels, 6 December 2011 alice.pittini@housingeurope.eu

  2. Housing bubble at the heart of current crisis • Subprime crisis in the US triggered the financial crisis • Burst of housing bubble in the US but also Ireland, Spain…

  3. Housing trends in the EU Over the last two decades, increase in: • home ownership rates • housing prices • mortgage loans Source: OECD European households’ distribution across tenures Source: Eurofund, EQLS

  4. Mortgage indebtedness in Europe Residential mortgage debt to GDP ratios in the EU 27 EU average: from 32% in 1998 to 52.4% in 2010

  5. Housing repossessions • England: 65 000 homeowners facing repossession this year, highest since 1992. About 425 000 borrowers at least three months behind with their home loan payments by the end of this year. • Ireland: one-in-nine homeowners are now finding it difficult to keep up with monthly payments and are either officially in arrears for more than 90 days or have struck a deal with their banks to restructure the mortgage.

  6. Cost of housing in Europe • Housing-related expenditure has increased considerably in Europe over the last decade and now represents the highest share of consumer spending, making up an average 22.9 % of total household consumption expenditure, up from 20.4 % in 2000.

  7. Rising prices of housing and energy Nominal house prices, 1998-2010 Gas prices for European households, 2005-2011 Source: European Mortgage Federation, HYPOSTAT (2010) Source: EUROSTAT

  8. Housing costs per household type and income level

  9. Good practices from the social housing sector • Avoiding housing repossessions: mortgage relief schemes (England, Italy, Spain..) • Promoting finance inclusion of social housing tenants and tackling borrowing from ‘loan sharks’ (MoneylineCymru, My Home Finance) • Increasing financial awareness: money advice services

  10. … Thank you for your attention! alice.pittini@housingeurope.eu

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