Banking Regulation can’t make up for poor government housing policies.
Making housing (property or rent) more affordable requires more construction and targeted incentives. In contrast, making mortgages more expensive or adding new taxes would undermine such policy objectives.
The political temptation is understandable: housing is scarce, many are frustrated, because they can’t afford their own home. Thus, pulling the regulatory lever on banks seems faster and easier than the grueling path of construction incentives, zoning laws, or permit reforms. But short-cuts would be misleading.
The data tells a clear story:
🏠 There is a significant negative correlation between costs and ownership: The higher the housing costs, the lower the homeownership rate.
🏠 Countries like Romania (88.9 %), Slovakia (93.8 %), Croatia (91.4 %), Albania (95.5 %), Hungary (89.8 %) and Serbia (93.2 %) show high ownership rates paired with lower housing costs.
🏠 Austria and Germany sit at the bottom of ownership rates while facing high costs.
In Austria, the ownership rate is at 54.2 % and therefore the third lowest rate in Europe.
This data shows that CEE markets work differently. High ownership rates lead to less dependence of the renting market and therefore create a fundamentally different situation for an EU wide regulation.
The combination of the "interest rate turnaround" and stricter lending standards (such as the KIM-V in Austria) disproportionately hit the young generation trying to acquire their own home. Furthermore, new regulations create legal uncertainty or distort the market and business models. This also impacts credit financing.
Therefore, real progress isn't made at the desks of regulatory authorities. It happens through construction incentives, efficient zoning, lower production costs and administrative reform. We need to enable construction, not prevent financing.