Housing Prices
Jul 7 2025 The Guardian
Across Europe, the financial sector has pushed up house prices. It’s a political timebomb
Practically every country in Europe has the same issue, housing costs too much. Rents are too high and home ownership is out of reach for most people.
The Guardian piece focuses on the financial sector ownership and control of property. Financial institutions obviously focus on making a profit, that is their function. They are in the property business because it is a good business to be in, not because they want to own property per se.
If you are in the property market, and your job is to focus on profit, you obviously want to keep pushing up prices, but you also do not want to build more housing, since that would lower the prices and thus lower your profits.
I agree, the financial sector ownership is a problem, but they did not create the market, they just operate in it, doing exactly what they are supposed to be doing. If a system is bad, it is not the operator’s fault if they use the system as it was designed to be used.
The previous sentence is slightly inaccurate, the system was not intelligently designed or actively created. Far from it, the property market ended up being what it is, because of the inaction of the governments.
And not just whatever government is in power in your country at the moment, every government in power during at least the past 20 years shares the blame.
If politicians wanted to solve this crisis, they would build a lot more affordable housing. More housing means lower rents and easier paths to home ownership, both of which would push all prices down. Eventually the profits would fall, and the financial sector would migrate to some other more profitable market.
A few quotes from the piece, emphasis is mine.
In 2023, $1.7tn of global real estate was managed by institutional investors such as private equity firms, insurance companies, hedge funds, banks and pension funds, up from $385bn in 2008. Spurred by loose monetary policy, these actors consider Europe’s housing a particularly lucrative and secure “asset class”. Purchases of residential property in the euro area by institutional investors tripled over the past decade.
The scale of institutional ownership in certain places is staggering. In Ireland, nearly half of all units delivered since 2017 were purchased by investment funds. Across Sweden, the share of private rental apartments with institutional investors as landlords has swelled to 24%. In Berlin, €40bn of housing assets are now in institutional portfolios, 10% of the total housing stock. In the four largest Dutch cities, a quarter of homes for sale in recent years were purchased by investors. Even in Vienna, a city widely heralded for its vast, subsidised housing stock, institutional players are now invested in every 10th housing unit and 42% of new private rental homes.
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If I was a politician, I would do something about this.
