Comparative Profiles

In the final section of this chapter, we present some comparative data relevant to the themes of this chapter, for a selection of countries, including those referred to in subsequent case study chapters.[1] Table 3.2 starts with some basic economic indicators and enables comparison also to be made with some key indicators of housing finance and markets.

The first indicator (GDP per capita) is the standard measure of level of economic development, although this may not necessarily measure social development. With that qualification, the USA stands out as having the highest income level, followed by a group including Australia, and three European countries, Germany, the Netherlands and Sweden. France and Japan have levels a little above the OECD average, whilst Britain and Ireland are only just above that average, with Italy a little below and Spain rather further below.

Table 3.2 Economic, financial and housing indicators for selected countries

Country

GDP/

cap

index

OECD

GDP

growth

%

Govt

Surp/

Deficit

%

Housing Invest %

Real

Mortgage Owner House Debt % Occup % Price Chg

2012

2002-12

2012

1996-2011

2012

2010-11

2007-13

USA

151

0.9

-9.3

4.5

69

66

-16.9

Australia

125

3.1

-2.3

6.4

85

69

7.7

Japan

106

1.8

-9.5

4.0

40

62

2.0

France

108

1.1

-4.8

5.0

43

58

-6.7

Germany

124

1.1

0.1

6.0

45

46

15.0

Ireland

103

2.2

-8.1

8.4

78

70

-44.9

Italy

98

0.0

-2.9

4.6

20

73

-4.0

Netherlands

126

1.0

-4.0

5.8

108

56

-25.5

Spain

93

1.4

-10.6

7.6

61

82

-36.8

Sweden

127

2.2

-0.4

2.5

81

64

5.2

UK

102

1.2

-6.2

3.3

81

65

-13.3

Euro Area

106

0.9

-3.7

5.8

52

67

-12.4

Sources: Wilcox and Perry (2015) UK Housing Review2014, Tables 8, 9 and 10, derived from OECD Economic Outlook reports; OECD (2015) Factbook: Economic, Environmental and Social Statistics, pp. 35, 37, 59, 206 http://www. keepeek.com/Digital-Asset-Management/oecd/economics/oecd-factbook-2014_ factbook-2014-enpage1; RICS 2010 European Housing Review Whitehead et al. 2014, Tables 1 and 2.

The second indicator looks at economic growth over the decade to 2012, covering both the ‘boom’ and the ‘crisis’ periods. Australia stands out in this table, with its very long ‘resource boom’ and virtual avoidance of crisis/recession (a situation which may be changing at the time of writing). Ireland and Sweden were better performing amongst the European countries, although for Ireland, like Spain, this conceals a more dramatic boom-bust cycle. After its ‘lost decade’ of the 1990s, Japan performed a little better than most of Europe. Amongst the larger European economies growth was around the 1.1-1.2 % level, lower than historical post-war averages, whilst in Italy it was effectively zero. Despite its higher income and productivity levels, the USA managed slightly lower growth than the larger European economies. This helps to show why standard of living issues have come to the fore in popular and political debate.

Following the GFC, government deficits have been the order of the day in most countries, with Germany and Sweden rare and notable exceptions. Deficit reduction through austerity has been a key theme of recent politics and policy, and has significantly constrained what governments might have wished to do on housing or welfare.

Looking more specifically at housing, we find quite significant differences on a number of indicators. Investment in housing (new and refurbishing), even over quite a long 15 year period, varies quite widely between countries, from lows of 2-3 % of GDP in Sweden and the UK to moderately high figures (c.6 %) in Australia, Germany and the Netherlands and very high figures in Ireland and Spain (c.8 %), reflecting their uncontrolled speculative booms as discussed in Chap. 7. There are also wide variations in mortgage debt, reflecting long-established differences in practices relating to finance of home ownership overlaid by different degrees of deregulation and exuberance in lending in the pre-GFC years. Thus, the Netherlands tops the table (partly due to tax relief incentives to borrow), followed by Australia, Sweden and the UK with quite high levels, whilst at the other end are Japan, France and Germany. Owner occupation rates are less variable than some people believe, having shown some tendency to converge, but the extremes in this table are represented by Germany (46 %) and Spain (82 %). Several countries have seen significant drops in owner occupation over the last decade or so.

The last column of this table shows real house price changes over the period 2007, which covers the market downturn/GFC/recession period and the initial recovery phase. Countries which were less impacted by the GFC and/or had more regulated finance tend to show a more positive picture of price change in this period (e.g. Germany, Australia). The countries with the greatest speculative excess show the greatest falls in this period (Ireland, Spain) with the UK, the USA and the Netherlands in an intermediate position. National house price data can be misleading—for example, at the time of writing, in the UK, prices have been rising strongly for a couple of years in London and the South, whilst stagnating or falling in the North.

Table 3.3 looks at a selection of demographic, social and environmental indicators, picking up some of the ‘key challenges’ discussed earlier in this chapter. Population increase is a key indicator of the

Table 3.3 Demographic, social and environmental indicators for selected countries

Country

Pop Incr Inequality Poverty CO2 Tonnes Completn Hsg Cost % pa S90/S10 <60 %med /capita /1000 >18 % DispInc

2002-12 2011

2011

2011

2007

2013

USA

0.88

16.5

17.4

21.2

6.7

Australia

1.45

8.5

13.8

24.3

7.25

Japan

0.01

10.7

16.0

10.3

9.9

France

0.59

7.4

8.0

7.7

8.7

18.0

Germany

-0.07

6.9

8.7

11.2

3.1

27.5

Ireland

1.55

7.4

9.7

12.5

23.5

15.5

Italy

0.41

10.2

12.6

8.2

n/a

17.5

Netherlands 0.37

6.6

7.8

11.6

6.2

29.5

Spain

1.11

13.8

15.1

7.6

17.3

19.5

Sweden

0.65

6.3

9.7

6.5

3.9

22.0

UK

0.72

9.6

9.5

8.7

4.8

20.5

EU28

0.34

9.2

OECD

0.65

9.6

11.5

12.6

Sources: OECD (2015) Factbook: Economic, Environmental and Social Statistics, pp. 35, 37, 59, 206 http://www.keepeek.com/Digital-Asset-Management/oecd/ economics/oecd-factbook-2014_factbook-2014-enpage1; OECD (2014) Inequality Update Tables Annex; Whitehead et al. 2014, Table 5; ONS 2014, Table 4. Pittini et al. 2015 The State of Housing in the EU, Brussels, Housing Europe. Charts 2 & 4, derived from EU-SILC. Australia Bureau of Statistics (Cat. 8752)

basic demographic demand pressures on housing, driven primarily by migration but also by birth rates and ageing. Japan and Germany stand out for having near-zero demographic growth in this period. This contrasts most obviously with Australia, Ireland and Spain, although in the latter two cases migration went negative after the GFC. Sweden and Britain have relatively high rates of growth, due primarily to migration, although not quite as high as the USA. Whilst the biggest boost for the UK was from new EU member states, in Sweden refugees and asylum seekers have been a large element. Now, as Europe faces a refugee crisis, and Germany has taken in a million in a few months, the picture will change again.

We highlighted in earlier discussion the significance of inequality and poverty, and the next two columns of Table 3.3 document variations in these. In 2011, inequality in this grouping was highest in the USA and Spain, and lowest in Sweden and the Netherlands, with broadly parallel differences in (relative) poverty. Australia and Japan stand out for having relatively high levels of poverty, given their moderate levels of inequality.

A further challenge sketched above concerned global warming, climate change and the need to ‘decarbonise’ the economy, not least the housing and urban systems. The figures for tonnes of CO2 emitted per capita shows wide variation between countries at a similar level of development, notably Australia with 3.7 times the level of Sweden and over three times the level of France and Spain.

The final two indicators are only shown for a subset of the countries. New house completions per 1000 adult population shows the relative importance of new build in the ‘best year’ just before the GFC. Apart from the spectacular (and indeed excessive) figures for Ireland and Spain, rates were quite high in France, the USA and even Australia, but notably low in the UK. Housing cost (defined broadly, to include utilities) as a share of disposable income, a measure of affordability or the burden of housing costs, was highest in the Netherlands and Germany, and lowest in the ‘high home ownership countries’ of Italy, Ireland and Spain (where many live mortgage-free on a mortgage taken out at much lower values in the past). This illustrates the issue debated around the role of owner occupation in housing and welfare regimes. In general, some care is needed in making comparisons of affordability, and use of a range of indicators is desirable. The higher costs in Germany reflect the high share of private renting, and possibly the quality of the accommodation and the inclusion of utility services, whilst in the Netherlands there may also be a factor of the high mortgage commitments that encouraged the tax relief (which is not netted off from the housing cost figures used here).

  • [1] China and Hong Kong are omitted, because they are not within the key statistical sources usedbased on OECD countries, and because Hong Kong is a special case of a city-state within a state.
 
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