After the financial crisis of 2008, it is increasingly being said that cities no longer belong to us, but are becoming an area of speculation and a tool for making profits. This process affects, among others, the housing market. Housing is treated as a commodity and not as a social good. This phenomenon is called the financialisation of housing. It consists of many different elements.

Market mechanisms

After 2008, the number of housing completions decreased in many countries, but the demand for housing did not decrease. Among others, housing was demanded by people migrating to cities and tourists. The importance of short-term rentals in tourist cities has increased. This has been at the expense of residents, who have experienced an increase in the price of buying or renting property.

Unfortunately, in most countries the market has become the main regulator, setting standards for the price, location and availability of housing and land, while the role of the state in housing management has declined.

The activities of the Blackstone fund and other similar companies

Another negative manifestation of this process is the business model initiated by the Blackstone fund. It is active in many countries around the world, including the Czech Republic, Denmark, Germany, Spain, Sweden and the United States.

For example, corporations buy multifamily homes in neighbourhoods deemed undervalued, where low-income people tend to live. After the purchase, the fund carries out repairs or renovations to the building and then raises rents. This often leads to the replacement of existing tenants with higher-income people.

Changes in cities

If property investment leads to the purchase of large areas of a city, the structure of the city changes, for example the public structure of streets and squares disappears. Urban space becomes privatised and de-urbanised. There is a decline in social diversity. In most cases, luxury buildings are built on bought-up land.

Access to data

Unfortunately, we do not yet have access to comprehensive data and methods for studying these phenomena in various cities and providing a reliable answer to the question as to what exactly are the factors causing the decline in housing affordability and other negative effects. The authors of the report “Who owns the city?”, which you can read on the website of the European Commission, have tried to explain the problem.

You can also find more information on the website of the United Nations and the Guardian newspaper.

What can we do?

The answer to these negative phenomena should be a more courageous, committed and sustainable policy from local governments and states. We would welcome it if it facilitated action by residents themselves, including promoting community-led housing.