Commentary. The annual amount of home loans has reached the monstrous figure of €350 billion. A colossal transfer of money from labor to financial and real estate rent seekers.

Young people do not need a mortgage, they need affordable rent

The next “Support 2.0” bill, which the government plans to launch this week, includes a provision that allows those under 36 to buy homes with the guarantee of the state. This is one of the first measures for the restart, which has been welcomed with general support. And yet, if we stop to think about it, the solution proposed follows the patterns of the past and does not take into account the needs of the new generations.

We know, as President Mario Draghi has said, how difficult it is for young people to find work, set up a home and start a family. It is equally true, however, that the destructive crisis that we have been dragging along with us for years, exacerbated by the pandemic, and the new reality of the labor market have changed the relationship of Italians, especially young people, with the notion of a home. Many certainties have disappeared.

There are studies documenting the significant increase in non-performing bank loans deriving from first-home mortgages. Housing hardship now also affects large sections of the middle class in difficulty. From the post-war period up to the 1990s, Italians have considered a home the safest investment par excellence, the status symbol of a good life achieved. The percentage of homeowners, which in 1965 was 46%, has risen to around 80%.

However, since the beginning of this millennium, and, in particular, with the financial crisis of 2007-2008, generated by the real estate bubble in the U.S., we have witnessed a profound gap between household incomes and housing costs. There have been stagnant incomes and rising (real estate) prices. This gap has been partly compensated for by relatively easy access to home loans and low interest rates.

The annual amount of home loans has reached the monstrous figure of €350 billion. A colossal transfer of money from labor to financial and real estate rent seekers (banks, landowners, construction companies). The so-called financialization of the “brick and mortar” sector has resulted in a massive redistribution of resources from the bottom towards the top. The construction industry, from the ‘80s to the first decade of the 2000s, has churned out an average of 200,000 housing units per year, almost all of them for sale.

This has led to an immense consumption of land and serious damage to the environment. Here, in these ungoverned processes of urban expansion, lies one of the origins of the many social inequalities and ills that afflict our suburbs. The majority of families who have bought homes in the last 20 years, and who would once have been classified as wealthy, now live on the edge of the poverty line, burdened by their debt to credit institutions.

In conclusion, it must be clear that relief for young people cannot be just an underhanded means of restarting the real estate market. It is legitimate to suspect that what lies behind so much attention to the world of young people is the self-serving intent to “move” a few tens of thousands of unsold housing units, especially in the desolate urban peripheries. The government is winking at the powerful real estate sector, which is claiming its large slice of the Recovery pie, and it is young people who are likely to pay the price. According to the new provision, each can go into debt up to a maximum of €250,000.

The problem in Italy is that no more public housing has been built for 30 years. The attributions in the field of public residential housing have been transferred to the regions, which are not investing. The rental market is weak and lifeless. In the cities, it has almost all been absorbed by short-term rentals, managed by the digital platforms. The objective to aim for is a rental market that would work, providing for a plan of investment in public housing for the weaker social groups.

The job market is calling for mobility, but the government is encouraging home ownership, the ultimate in immobility. If we make young couples take on heavy mortgages to pay, it is a matter of necessity to look for work as a function of the location of the house and not vice versa. In a globalized economy, in which job opportunities can often change, renting (social, subsidized) housing for young people corresponds better to the different and changing needs of life, mobility, work and income.

It is therefore necessary to challenge a housing policy that is focused entirely on the interests of real estate and financial rent seekers. The new demand for housing should be met by providing incentives for housing stock renovation and urban regeneration, starting from the existing heritage and the reuse of abandoned or degraded urban areas.

Without further urban sprawl, hundreds of thousands of new housing units could be found for the rental market at sustainable prices. And it would be possible to implement those operations of “stitching up” the urban fabric that Renzo Piano talks about.

The right path to follow is an idea of housing that would incorporate more use value and less exchange value.

Subscribe to our newsletter

Your weekly briefing of progressive news.

You have Successfully Subscribed!