When Shelter Becomes Luxury: ECOFIN's Search for Housing Solutions

With global prices skyrocketing, and the dream of owning a house becoming more and more of a distant dream, the Economic and Financial Affairs Council (ECOFIN) is focusing on one of the most important economic issues in the world: housing. The luxury has been reduced to a necessity in most economies that formerly considered it a luxury. The delegates of this year's council did not only face the crisis as a social problem, but also as a macroeconomic problem.

The delegate of India started the session by stating that “Shelter must not be treated as privilege,” and demands that housing be given the first priority as basic shelter and that there should be policies that are well aligned to the U.N. Sustainable Development Goals and more transparency in market practices. This approach is directly opposed to the stance of Germany, who sees unaffordability as “a potential fault line for financial instability.” that requires severe fiscal discipline. Likewise, South Korea has been lending support to the ideas of Germany by encouraging the government to allocate a lot of funds and intervene to stabilize the volatile housing markets.

Integrating these opinions, the US' new HOME framework provides a possible way to reach a consensus. This acronym stands for: Harmonized monetary policies to ensure affordable lending rates, Optimized fiscal spending targeted at expanding low-income housing stock, Mobilized public-private partnerships to accelerate construction, and Equity-focused data sharing to enhance transparency. This framework recognizes the reality that has been misused in economic discussions which is the fact that housing can be more than physical protection, it is the ground on which personal security, self-respect and future prospects are built,

ECOFIN delegates continue to face challenges because of market failures and market dynamics turning even the necessity of a home into an unaffordable luxury of an expanding group of the world population. As the delegates carefully negotiate between the extremes of pure market trust and direct government interference, their ultimate task is to get homes back to its role as a place of belonging for all of us, a place where we can be true to ourselves and live the way we want.