Housing policy – the link between welfare and economic development

Many Western European countriesturned into welfare states in the 1950s, wherebyhousing became a tool of income redistribution,largely through the construction of a largesubsidized rental stock. In Northwestern Europe,over 60 percent of the present stock was built after1945. The states' response to housing shortages wasgeared to increasing social equity; a huge financialeffort was needed to accommodate the rapidly growingnumber of households. Since the early 1970s,governments have been trying to increase theeconomic efficiency of their housing systems withoutcompromising social equity. Consequently, the focusof housing policy shifted from blanket regulation totargeted support for households in need. Morefundamental changes lie ahead, as governments nowgive priority to economic development goals. Thisarticle outlines the role that housing policy canplay in Europe's economic development. Whereashousing policy generally follows the economy, thatlink could also work the other way around. As localgovernments compete for economic growth, a promisingstrategy is to improve local housing conditions.