Remarks by Mathias Cormann,

Secretary-General, OECD

Paris, 16 June 2021

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Distinguished guests, colleagues,

I am delighted to open the OECD High-Level Policy Roundtable on Better Housing for Better Lives.

Housing is a critical element in economic and social well-being. Housing costs are the single largest household budget item across all income groups. Rising house prices and rents place an increasingly heavy burden on household budgets, especially among the less well-off.

Across the OECD, on average, housing costs absorb more than a third of the budget of the bottom 20% low-income households.

Part of the challenge is that homebuilding has not kept pace with housing demand, notably in the most sought-after metropolitan areas. Direct public investment in housing development has been declining for two decades.

In 2018, the latest year for which data is available, the OECD average was below 0.01% of GDP.

The COVID-19 crisis starkly exposed unequal opportunities in housing conditions.

Today, poor-quality housing makes it both harder to protect family members from contagion and harder to telework.

The pandemic and its aftermath should encourage policymakers to rethink many dimensions of housing policies, as well as urban planning and transport.

The OECD Housing Policy Toolkit, the main output of the first phase of our across-the-house project on housing policy, aims to help countries address the complex reality of developments in housing markets and policy.

The Toolkit contains a report entitled Brick by Brick: Building Better Housing Policies that summarises the project’s main findings so far.

It also features a Dashboard of indicators covering outcomes and policy settings, and is accompanied by Snapshots of the housing sector in OECD countries.

A central policy objective of the Toolkit is to ensure universal access to high-quality affordable housing, making housing policy an integral part of a broader inclusive growth strategy.

Progress on this can now be tracked with the latest updates to 30 cross-country indicators in the OECD Affordable Housing Database, which covers the housing market, housing conditions and affordability, and public policies to make housing more affordable in over 40 countries.

Beyond the database, let me highlight five key priorities emerging from the Housing Policy Toolkit.

First, unlocking additional supply is key to ensuring that people have access to housing that is affordable, energy-efficient and adapted to their needs.

More public investment would ease shortages, especially for households on low or unstable income. Building green social housing can also act as a catalyst for the energy transition of the construction industry as a whole.

Second, land-use reforms can reduce obstacles to new residential construction, for example by removing overly tight building height restrictions or minimum lot size requirements.

Decisions on land use and planning must be made based on the needs of whole metropolitan areas rather than via a piecemeal district-by-district approach.

Such reforms could help put a brake on the strong upward trend in real house prices, which has been widespread among OECD countries – and which has continued since the onset of the pandemic.

Since 2005, house prices have risen by nearly 20% in real terms on average across the OECD, with much larger increases in some countries.

Third, greater flexibility in regulations over landlord-tenant relations, including by loosening rent controls, would encourage increased investment in housing.

Over the past year, restrictions have been tightened to protect tenants hit hard by the crisis.

This was an entirely reasonable response in the circumstances.

However, as the immediate crisis subsides, those measures should be revisited. Because over times, if those crisis response measures remain in place on a more ongoing basis it will discourage the private supply of rental housing, ultimately making access to affordable rental housing more difficult.

Reforms to increase flexibility must be accompanied by complementary policies, such as increasing the availability of social housing.

Fourth, it is essential to strengthen environmental standards to help us achieve emission reduction targets and upgrade the energy efficiency of the housing stock. This can put upward pressure on construction costs and rents, but these investments mean lower heating costs and will preserve the long-term value of homes.

Fifth, there is an economic and social case for revisiting privileged tax support for home-owners, such as mortgate interest relief, which in many countries inflates household debt and house prices while having only a limited effect on housing supply.

To help countries address these and other challenges, the OECD will further advance its work on housing.

Looking ahead, we will aim to explore several priority actions both in the second phase of our whole-of-Team-OECD project and beyond:

• We will focus on the consequences of the COVID-19 crisis and the digital transformation for housing;
• We will look at the strains the pandemic may be creating in mortgage markets, which were already characterised by high household debt levels in many OECD economies after an extended period of very low borrowing rates;
• We will intensify our efforts to improve the evidence base for housing policy, including upgraded statistics on both the quality and price of housing – including at regional level within countries – as well as data on policies such as a land use regulation;
• And we will help countries develop policies to ensure a rapid energy transition in the housing sector.

Colleagues,

High-quality and cutting edge housing policies can be a crucial tool to promote stronger, more sustainable and more inclusive growth.

Today’s meeting can make a big contribution. The OECD is committed to continue working with you, and for you, in this endeavour, to design, develop and deliver better housing policies for better lives.

Thank you.