In response to persistent housing quality and affordability challenges, the Latvian government recently established the Housing Affordability Fund, a long-term self-sustaining financing model to channel investment into affordable housing. This report summarises the main findings from a project to support Latvia in identifying the institutional arrangements, funding and financing opportunities, and operational tools to scale up the Fund and ensure its lasting impact on the housing market. The report draws on the rich and diverse experiences of four peer countries in establishing and operating revolving fund schemes for affordable housing (Austria, Denmark, the Netherlands and Slovenia), as well as engagement with a range of stakeholders in the Latvian housing market. This project was carried out by the OECD, in the framework of the Technical Support Instrument of the European Union, in collaboration with the Directorate General for Structural Reform Support of the European Commission and the Latvian Ministry of Economics.
This work is a joint effort of the OECD Economics Department and the Directorate for Employment, Labour and Social Affairs.
Latvia has enjoyed continuing catch-up in per capita incomes with the more afﬂuent OECD countries through the pandemic, despite slow progress in vaccination. Fiscal policy has handled the health-system challenges while protecting jobs and ﬁrms but could do more to ease inequality and poverty, especially among the elderly. Latvia’s population has been shrinking for decades and will continue to do so. This means it must focus on increasing employment among those of working age. That implies a need to tackle the large gender wage gap that is discouraging women’s labour force participation, delay retirement and keep everyone in good health.
Housing affordability and quality are pressing challenges in Latvia. While Latvian households spend, on average, less on housing than their OECD peers, many are stuck in poor quality housing. Residential investment has stagnated since 2008, and the housing stock has been insufficiently maintained. In the face of these challenges, public support for housing is limited and an underdeveloped rental market further limits affordable housing alternatives. This report provides an in-depth assessment of housing affordability challenges and identifies policy actions to address them. The report is the result of the work of an interdisciplinary team bringing together the Economics Department and the Directorate for Employment, Labour and Social Affairs. The report contributes to the cross-cutting OECD Horizontal Project on Housing.