Urban Austerity

Impacts of the Global Financial Crisis on Cities in Europe

Sebastian Schipper, Barbara Schönig

• Publisher: Verlag Theater der Zeit
• Year: 2016
• ISBN:
  9783957491084
• Topic: Social Sciences
• Subtopic: Urban Sociology
• Index: Social Sciences

What started as a mortgage crisis in 2007 and became a global financial and economic crisis in 2008, has transformed into a sovereign debt crisis since 2010. Throughout, cities all over Europe have been at the heart of the turmoil in multiple ways: indebted homeowners have been evicted, masses impoverished, public budgets tightened, municipal infrastructures privatized, and public services downsized. In short, austerity measures have been implemented.In view of the above, this book focuses on an issue that affects most people living in urban regions across Europe: the idea that fiscal austerity is a necessity that politics cannot avoid, no matter how harsh the consequences might be. To bring the effects of austerity politics to the forefront, the authors of this book expose actual urban problems in their spatiotemporal dimensions, discuss regulatory restructurings under a new regime of austerity urbanism, and reflect on the role of urban social movements struggling for progressive alternatives.Barbara Schönig is Professor for Urban Planning and Director of the Institute for European Urban Studies at the Bauhaus-Universität Weimar, Germany.Sebastian Schipper, PhD, is a researcher at the Department for Human Geography, Goethe-University Frankfurt am Main, Germany.

Housing crisis

Dimitra Siatitsa

Changes in Housing and Property under the Austerity Regime in Greece

Challenges for Movements and the Left

1. Introduction

Especially since 2008, housing has emerged once again as a key terrain of contradiction and conflict. The field is very much related to the roots of the global financial crisis (especially due to the scale of housing finance); however, it is also one of its most dramatic consequences and of particular strategic importance to the processes of capital recovery (Harvey, 2012). The abrupt destabilization of previous welfare and societal arrangements that provide housing for the vast majority creates a momentum of deeper understanding and questioning of the contradictions expressed through housing – between commodity and human right, and between exchange and use value (Harvey, 2014). In such a moment, previous perceptions and certainties are reviewed. Discussions about alternative ways of providing affordable and decent housing are generated as demands for public intervention and alternative solutions become more widespread (Marcuse, 2009; Hodkinson, 2012).

The housing question returns in more and more contexts. All over Europe, in terms of housing, precariousness and deprivation are escalating. The growing number of arrears, repossessions, and evictions as well as increasing homelessness illustrates this. Although housing is a contextually-determined and path-dependent field, local housing markets and systems have become more and more interconnected due to processes of financialization (Martin 2011), the involvement of global actors, and the prevalence of neoliberal doctrine. In differentiated and uneven ways, this doctrine shapes the locally implemented policy answers on the basis of fiscal austerity, dispossession, privatizations, liberalization, and welfare state retrenchment (Peck et al., 2013; Aalbers, 2015).

Critical urban analysis can play an important role in the process of bridging these different realities and creating a common space of mutual understanding, exchange, and solidarity. First, it can do so by exposing the similar logics underlying recent restructuring measures and the strategies of financial and political elites. This helps obtain a broader understanding of the role of housing and land in the processes of urban restructuring that have occurred since 2008. Second, critical analysis can provide insight into the political heritage (i.e. institutional history and genealogy of policies and discourses) related to housing in different contexts, including the rapid expansion and consolidation of the neoliberal paradigm during the last decades. A greater understanding is gained of why some policies and programs as well as claims, practices, perceptions, and ideologies are more legitimate than others, why they do or do not appear on the public agenda, and why they are more likely to occur in one context than the other. A process of comparison and synthesis is required in order to understand similar trends and convergences as well as important differences. The aim is to contribute to the development of a strong and far-reaching counter-framing of the housing issue and to pose critical questions regarding possible alternative policies, claims, and practices.

This chapter addresses these issues by focusing on the impacts of the global financial crisis and public-debt crisis management policies on housing and real estate property in Greece. First, it explains the specificities and particularities of the Greek housing system. Then, it presents the recent political transformations (e.g. policies, public debates, and social contestations) of the Greek housing system that followed the austerity measures implemented since 2010. The aim is to provide a background for a common understanding of the differentiated effects of neoliberal austerity in the field of housing, which was imposed by international bodies and customized and implemented by local elites.

2. Neoliberal austerity in Greece

In the case of Greece, housing – both in terms of production (i.e. real-estate and construction bubble) and consumption (i.e. private debt) – was not closely related to the causes of the financial breakdown, as was the case in other countries, such as the United States (Gotham, 2009; Immergluck, 2011) or Spain (Lopez & Rodriguez, 2011). Rather, housing problems have emerged as a consequence of the severe austerity measures implemented and the spiral of recession and economic collapse provoked by these measures.

The beginning of the crisis, in Greece, was marked by the introduction of the European Mechanism of Support (ESM), in 2010, and the implementation of structural economic adjustment programs and measures as part of consecutive agreement memorandums monitored by the troika (i.e. European Commission, European Central Bank, International Monetary Fund). As in most places, the promoted measures and reforms primarily aim to protect the financial sector and global investors, while consolidating new labor-capital relations (Hadjimichalis, 2011). Adjustments include massive state-financed rescue and recapitalization programs of the financial sector, paralleled by “inevitable” public expenditure cuts, the curtailment of the welfare state, the dismantlement of labor and social rights, as well as the extensive privatization of public assets. This has resulted in a vast social and economic catastrophe. What started as a public debt crisis has, since 2010, evolved into a wider social, political, and humanitarian crisis: unprecedented unemployment levels, precarious employment and poverty, massive income losses, and the depletion of the social structures and provisions left in an already residual welfare state. In economic terms, austerity measures have led Greece to economic collapse and a vicious circle of recession and escalating indebtedness, rendering the public debt socially and economically unsustainable. At the same time, the last five years of crisis management have provoked radical changes to the political scene: a deep depreciation of the old political system, intense social mobilizations, and politicization of the public debate, but also the rise of far-right fascist and racist perceptions and attitudes. A major milestone in this process has been the rise of a left-wing party (in power) in 2015.

Within this context, Greece, today, is facing a severe and escalating housing crisis, which affects broad sections of the population, thereby multiplying housing precariousness, inadequacy, and exclusion, as households are increasingly overburdened by housing costs and face bad housing conditions, energy poverty, overcrowding, seizures, evictions, and homelessness. Today’s housing problem must be acknowledged primarily as an income and labor problem, rather than a result of the housing market. In 2014, the unemployment rate reached 25.6 percent (more than 50 percent youth unemployment rate), while incomes dropped by 30 to 50 percent in both the private and public sectors opposite 2010. Thus, increased housing deprivation relates to individuals’ inability to cover monthly housing expenses. This is also depicted by Eurostat data, which shows that Greece records the highest rates of housing cost overburden in the European Union.¹ This is also due to the increasing costs of basic utilities, such as electricity, and the excessive taxation of income and property – a pillar of the structural adjustment programs that disproportionally burden low and middle incomes (Giannitsis & Zografakis, 2015). As a consequence, households’ private debt to banks, the state, and social security funds has been culminating.²

The housing crisis landscape is also characterized by increasing housing deprivation and homelessness,³ the increasing need for emergency shelter for thousands of refugees and migrants arriving from the Middle East and Africa (according to international organisations, 310,000 people crossed Greek borders by September 2015) and the further marginalization of vulnerable groups. This is coupled by a steep recession in the housing market and construction sector,⁴ the destabilization of previous economic and social housing arrangements, and the complete lack of tools and means to implement housing policy.

3. The Southern European housing model and Greek particularities

In cross-country comparative analyses of the European Union (Allen et al., 2004), the Greek housing system is placed in the Southern European housing group alongside Italy, Spain, Portugal, and Cyprus. This housing group is characterized by high homeownership rates, the importance of family and family networks for the provision of welfare and housing, extremely small (zero percent in Greece) social housing sector, and indirect public intervention in housing (e.g. fiscal incentives, subsidized mortgage, land and construction laws). The rental sector accommodates a higher percentage of low-income residents and migrants; it is considered a transitory tenure for middle and upper classes. Southern European housing systems also have high rates of second and vacant housing, while construction and real estate are key economic sectors. In these countries, housing has played a very significant role for social integration and social stability. It has been at the core of family strategies, such as investing savings in real estate property in order to ensure social security and welfare for family members.

As in other Southern European countries, access to ownership since the post-war/post-civil war period has been a specific class project, following the motto “every proletarian, a homeowner.” The aim was to secure social harmony and order by using homeownership as a means of social control. This project was implemented in every country using different strategies and with many contradictions; at the same time, popular classes claimed access to ownership to be a means to secure the right to housing (Leontidou, 1990). In Greece, housing was reserved as a terrain for the formation and sustainment of a “petty-bourgeois” class ideology; this allowed the wide redistribution of rents from urbanization processes to lower and middle strata, thereby democratizing speculation (Mantouvalou et al., 1995) and wide social participation in what has been called “sui generis popular capitalism” (Maloutas, 2003).

Due to historical processes of land distribution and urbanization, property ownership in Greece applies to small and fragmented land plots and housing, which are broadly distributed among social groups, although uneven in terms of quality and value.⁵ As a consequence, there are no major housing owners – neither the state nor social security funds or private companies.⁶ Housing production – spatial development in general – has traditionally been characterized by individual construction, often linked to informal urbanization processes, self-promotion, and self-financing (i.e. of traditional nature, through family savings and parental transfers).⁷ These mechanisms facilitated the emergence of extensive housing market activity, in which small construction companies, landlords, and capital prevailed, thereby becoming an important motor of the Greek economy (in terms of gross domestic product and employment). The housing sector has intentionally been protected from the involvement of big capital and large construction companies, also through state control of the financial sector. In the past, this allowed for the development of small and medium-sized promoters, construction companies, and material production industries.

Housing has also been the main mechanism for the integration of migration flows in Greek society and the main strategy for upward social mobility, since it has functioned as a multiple asset in the context of the family economy (i.e. covering housing needs, additional income, investment strategy, entrepreneurial asset for small and medium-sized enterprises). Within this model, households play a dual role as tenants and small-scale investors. Thus, the contradiction between the use and exchange value of a house is blurred.

Important changes and restructurings took place in the housing and construction sector in Greece during the 15 to 20 years preceding the crisis (i.e. period of prosperity and growth). These processes intensified significantly during the period from 2000 to 2007. Especially since the second half of the 1990s, Greece experienced profound economic changes, which were mainly financial in nature (i.e. expansion of credit and consumption, increase in households wealth due to increase in financial liquidity, rise of real estate assets and rent prices, increased housing construction). At the same time, inequality, poverty, and social polarization increased. Previous financing mechanisms (e.g. family savings, exchange in kind, self-promotion) became less common. Credit liberalization and expansion, due to the signifi...

Table of contents

• Cover
• Titel
• Table of contents
• Introduction
• Urban governance in times of austerity
• Urban infrastructure and public services
• Housing crisis
• Urban conflicts and contestations
• Appendix
• Imprint