Saturday, September 16, 2023

European cities, housing crises, and too much tourism

'Far from the Madding Crowd' (1874: Thomas Hardy's novel)
Four Seasons Resort, Langkawi, Malaysia
Credit Michael Hennigan

William Whyte (1917-1999), a Fortune magazine editor, was the author of a famous 1956 book 'The Organization Man.' He argued that corporations and suburbs were turning the American middle class into timid conformists more interested in pleasing their colleagues and neighbours than in thinking or acting for themselves.

The book challenged claims of entrepreneurial vision and courage in business by describing the ongoing bureaucratisation of white-collar environments including board rooms, offices, and laboratories. Whyte also popularised the word “groupthink.”

His New York Times obituary noted "As an urbanologist he wrote, taught, planned and once spent 16 years watching and filming what people do on the streets of New York. He also conducted a study showing that a large percentage of companies that moved from New York City ended up in locations less than eight miles from the homes of their chief executives." Finfacts: Cognitive dissonance and the flawed American democracy

The triumph of big cities

Jacques Lévy, emiritus professor of Geography and Urbanism at École polytechnique fédérale de Lausanne and Reims University, has said in an OECD essay, that the from the 1950s to the 1990s, certain observers predicted the death of the city...Today's victory of the urban spatial choice is overwhelming, but this triumph raises novel, major political issues.

"It can be argued, as well, that urbanity is giving productive systems and societies new momentum. This is the consequence of the growing part of creativity, which is the non-programmable component of production in social dynamics."

"Two major consequences of this change can be noticed. First, the size effect has gained a new significance. It used to be a direct function of mass: more inhabitants meant more workers and more consumers. It has become exponential because of the critical value of links: 1mn people can generate 1trn potential human interactions. In innovating sectors, this point turns out to be crucial: 69% of all British scale-up companies localise in London, 72% of the French ones in Paris, 61% of the Swedish ones in Stockholm, and even in such a multipolar country like Germany, 54% in Berlin. The 5,596 European scale-ups are located in 476 cities, but 67% concentrate in 48 cities only, which are, with few exceptions, the largest urban areas on the continent."

He writes [In 27 countries out of 42, one city concentrates more than 70% of these mature start-ups. Promising economy-oriented activities tend to show the same geographical pattern as cultural creativity (science, design, art, media).

Second, the classic, early 20th-century...concentric model is experiencing a new lease of life. Suburban or peri-urban dwellers clearly remain part of the urban area, but locations matter even inside an urban system.]

A paper by Jacques Lévy and others, using phone data, found a “big surprise”: on average, there were about 5mn customers of non-French phone operators in France in 2022-23, compared with just under 2mn foreign visitors measured by “official data.”

Who lives where? Counting, Locating, and Observing France’s Real Inhabitants

However, there are housing crises in many of the big European cities

Housing Anywhere International says the ranking of the biggest year-on-year changes varies depending on room type.

When it comes to apartments, Budapest (42.9%), The Hague (27.8%), Utrecht (25.8%), Porto (25%) and Lisbon (15.8%) are the most extreme cases of the 23 analysed cities.

In terms of the year-on-year change of a private room, however, it is: Lisbon at (29.4%), The Hague (28.6%), Berlin (22.6%), Amsterdam (18.8%) and Frankfurt am Main (16.9%).

For studios, Lisbon (70.3%) leads, Florence (33.3%), Hamburg (27.4%), The Hague (23.8%) and Porto (23.3%). Notably, both Lisbon and the Hague appear in all three of the top 5 roundups.

The UK which has strong NIMBY (not in my backyard syndrome) lobbies, have the highest housing constraints and rent increases in Europe. The average rent of a house increased by 9.4% in the first quarter of this year, reaching £1,190 ($1,494). According to data from the British online real estate company Rightmove, the average rent in the capital, London, rose to an all-time high at £2,501 per month, up 14% over the same period.

Robert Shrimsley of The Financial Times has said "In the past, identifying as the party of aspiration helped the Tories surmount such differences. As people progressed financially, got a decent job, bought a home and started a family they found themselves on the blue brick road. This path has been broken by salary stagnation and high house prices. In 1997, two-thirds of 35- to 44-year-olds had a mortgage. By 2017 that figure was down to half. In England, the percentage of private renters in that age group rose from 8.2 to 27.6% over the same period. Small wonder the crossover age is rising."

May 2023: "The number of families in England and Wales with adult children living with their parents rose 13.6% between the 2011 Census and Census 2021 to nearly 3.8mn.

In 2021, around 1 in every 4.5 families (22.4%) had an adult child, up from around 1 in 5 (21.2%) in 2011.

The total number of adult children living with their parents increased 14.7% in the same period from around 4.2mn in the 2011 Census to around 4.9 million in Census 2021."

For those taking out a new tenancy, the average Irish rent nationwide in the second quarter of 2023 was just under €1,800 a month.

The average new rental in Dublin was €2,344, up 8% in a year according to Ronan Lyons of Trinity College, for the DAFT housing service.

The Irish Economic and Social Research Institute (ESRI) published a paper, 'Housing affordability: Ireland in a cross-country context' last July.

"Ireland has one of the biggest gaps in homeownership between younger and older people in Western Europe, a new report has found, even as housing here appears to remain relatively affordable overall compared with elsewhere.

Close to 80% of people over 40 in Ireland own their home, according to the report published by the Economic and Social Research Institute (ESRI), yet barely a third of adults younger than 40 are homeowners.

That gap between young and old is the second-highest out of 15 European countries included in the research. Only Greece has a wider divide. More than a quarter of 25-34-year-olds here still lived with their parents during the period covered by the study, while Ireland had the lowest share of single adults under the age of 40 living outside their parents’ home."

Bloomberg in September 2023, noted "The housing shortage is particularly acute in the Dutch capital because the city has become a magnet for foreigners, with 18,000 newcomers moving to the city of about 882,000 in 2022.

Other capitals are in a similar bind. Dublin’s population has grown almost 12% in the past decade as government tax breaks created incentives for global pharmaceutical and tech companies such as Meta Platforms, Alphabet’s Google and Pfizer to set up their European headquarters there.

In Zurich, home to Google’s largest research centre outside the US, the vacancy rate for apartment rentals is just 0.07 per cent and lines for apartment viewings regularly stretch to more than 100 people. It’s become the norm for apartment hunters to bring recommendation letters, HR contacts, bank statements and gifts such as wine and chocolates when they are invited to view a property."

Rental prices in Estonia, one of the top destinations for Ukrainian refugees, jumped 22 per cent in 2022, according to Eurostat. 

The number of available rental properties in Ireland peaked in 2009, with over 23,400 homes listed nationwide. Since then, stock has dwindled, with around 1,200 properties available for a population of over 5 million as of August 1. Housing construction in the Netherlands fell far short of a target set last year to build about 100,000 new homes a year by 2030, with affordable housing meant to account for two-thirds of the total."

On April 30 2023, almost 4m non-EU citizens who fled Ukraine as a consequence of the Russian invasion on 24 February 2022 were benefitting from temporary protection status in EU countries.

Share of European young adults aged 18-34 living with their parents

In 2020 Sweden (17.5 years) recorded the lowest average age of young people leaving their parental home and Croatia (32.4 years) was the highest among the EU countries in 2020. In 2020, young women moved out of their parental home earlier than young men in all EU Member States apart from Sweden.

Between 2016 and 2019, the annual number of Swedish young people who moved out of their parental home decreased from 90,200 to 86,200. The downward trend reversed in 2020 when 90,500 persons left home. In 2021, the number of movers increased further to 91,600.

EU countries in percentages: Austria 38.6; Belgium 43.5; Bulgaria 59.6; Croatia 78.2: Cyprus 53.5; Czechia 44.9; Denmark 15.5; Estonia 33.4: European Union 49.4; Finland 16.7; France 43.4; Germany 31.3; Greece 71.5: Hungary 51.9; Ireland 64.1; Italy 69.4; Latvia 40.6; Lithuania 43.8; Luxembourg 49.3; Malta 59.3; Netherlands 35.5; Poland 65.7; Portugal 70.7; Romania 53.9; Slovakia 71.2; Slovenia 59.1; Spain 65.9; Sweden 12.5.

Ireland had a rate of 44.1% in 2013.

Other countries: Switzerland 38.5 (2021); Türkiye 56.0 (2021); Iceland 34.4 (2018); Norway 22.0 (2020); UK 36.8 (2018.

Green for under 20% and red for above 60%.

This year the the Pew Research Center compared US and Europe 'Young adults in the US are less likely than those in most of Europe to live in their parents’ home. Serbia and; Türkiy are not members of the EU.

On 1 January 2023, the population of the EU was estimated at 448.4mn inhabitants, 2.792mn more than the previous year.

A functional urban area consists of a city and its commuting zone. Functional urban areas therefore consist of a densely inhabited city and a less densely populated commuting zone whose labour market is highly integrated with the city (OECD, 2012). Continuously shrinking cities: representing about half (70) of the shrinking FUA in 2011, mostly in Eastern Germany, Hungary, Bulgaria, Latvia, Lithuania, Croatia, Romania and Poland.

According to Eurostat "Among the 20 EU Member States where the population increased in 2022, six countries (Ireland, France, Cyprus, Luxembourg, Malta and Sweden) recorded both a natural increase and positive net migration contributing to their population growth. In 14 Member States (Belgium, Czechia, Denmark, Germany, Estonia, Spain, Latvia, Lithuania, Netherlands, Austria, Portugal, Romania, Slovenia and Finland), the positive net migration was the driver of population growth, as natural population change was negative."

Sweden: In 2000, there were nearly 8.9mn people living in the Scandinavian country, and this had increased to 10.52mn in 2022.

Stockholm — 1.206mn and 1.700mn.

20% of the population in Sweden in 2022 was foreign-born.

Denmark: 5.340mn in 2000 and 5.910mn in 2023

Copenhagen — 1.077mn and 1.381mn

Foreign-born rate 15%.

Finland: In 2000 the population was 5.176mn and 5.545mn in 2013.

Helsinki — 1.019 in 2000 and 1.338mn 2022.

Foreign-born rate 8%.

The Netherlands: In 2000 the population was at 15.930mn and 17.700 in 2023.

The Netherlands, also known informally as Holland, is the most densely populated country in Europe, except for very small city countries like Monaco, Vatican City, etc. The population density is 522 per Km2.

Amsterdam — The current metro area population of Amsterdam in 2023 is 1.174mn. It was 1.005mn in 2000.

The foreign-born rate is 12%.

Ireland: In 2022 the population of the Republic of Ireland was 5.150mn, compared with 3.900 in 2002. Between 2006 and 2007 Ireland's population rose by over 140 thousand, the most significant increase throughout the surveyed period.

Dublin Metro — 1.006mn in 2002 and 1.270mn in 2022.

The European Foundation for the Improvement of Living and Working Conditions (Eurofound), a unit of the EU that is based in Dublin, published a report on EU housing in May 2023: 'Unaffordable and inadequate housing in Europe'

According to this year’s edition of the UBS Global Real Estate Bubble Index, imbalances in housing markets declined sharply. Only Zurich and Tokyo remain in the housing bubble risk category. For the study, UBS analyzed residential property prices in 25 major cities around the world. From mid-2022 to mid-2023, real house prices in the cities fell by 5% on average.

According to data from 2020, over half (53%) of people in the EU live in a house, 46% in a flat and 1% in another type of building.

It is most common to live in a flat in Spain (66%) and least common in Ireland (9%).

"There has been a steady increase in people living in flats, from 45.4% in 2010 to 46.3% in 2020. This increase has occurred mostly in areas of intermediate population density (towns and suburbs), with a 5 percentage-point increase in people living in apartments in such areas. However, the proportion of people in the EU living in an apartment in sparsely and densely populated areas (rural areas and cities) reduced by 2.3 and 1.8 percentage points respectively."

Ireland has seen an increase in renting overall, especially in (private) unsupported tenancies, up from 4% of households in 2002 to 13% in 2020 (ESRI, 2022a).

According to the report, many mortgage payment tax deduction schemes are being (or have been) reduced or abolished (in Finland from 2023, and in Ireland and the Netherlands). They tend to benefit people with higher incomes more than those with lower incomes.

"The number of people on social housing waiting lists is considerable.

In Poland, in 2020, 136,156 households were waiting for municipal housing, including 74,856 for social rental agreements. In Hungary in 2020, 12,245 people were waiting for social housing. In Belgium, 170,000 people are on waiting lists in the Flemish region, 37,500 in the Walloon Region and 49,771 in the Brussels Region (2022). In Ireland, 61,880 households are on waiting lists. In Slovenia, 6,600 households are on waiting lists, 2,500 in Ljubljana, where only 1 in 10 applicants are granted non-profit housing (Piano, 2017, cited in Stropnik, 2019). The Portuguese Programa de Arrendamento Acessível had 19,000 applicants for tenancies by July 2021, while only 1,010 dwellings had been made available by private lessors at sub-market rents.

Waiting times have increased in some countries. The Stockholm housing agency’s waiting times have been increasing for many years. In 1997, the waiting time was on average 5.1 years (the longest waiting time was 10 years). By 2017, the average waiting time for an apartment was 12.7 years.

The maximum, for an apartment in Stockholm city centre, was 22 years (Swedish Union of Tenants, 2018)."

High-rise taboo in Ireland and Dublin and urban sprawl

In 2006, Dublin's sprawl was cited by the European Environment Agency (EEA) as a "worst-case scenario" of urban planning so that newer EU member states such as Poland might avoid making the same mistakes.

The Ballymun social disaster of the 1960s where public housing for young families with limited or no amenities; with no resident management and where no one had a personal stake in their units; led to what can be termed "Ballymun Syndrome," with high-rise buildings becoming a taboo in Ireland.

It was a gift for NIMBIES (not in my backyard syndrome) over several decades.

Also in the 1960s two high-rise commercial buildings were completed. Dublin’s Liberty Hall opened in 1965 and has 16 storeys standing some 59. 4 metres while Cork County Hall in 1968 became Ireland’s tallest building and kept the record for 40 years. It also is a 16-storey building at 64.3 metres high and following a refurbishment in 2006, its height was extended to 67 metres.

In September 2008 in Cork City Centre, adjacent to the City Hall, the 17-storey Elysian Tower together with connected 6-8 storey buildings on a 3-acre site, was completed for commercial and residential use.

There have been a few more added in Dublin.

According to a government report published in April 2018, “there is evidence that 6-storeys is an optimum height from a viability perspective at present, for the delivery of apartment schemes at sales prices” within an affordable range specified.

Population densities in Paris and Dublin

The city of Paris is divided into twenty arrondissements municipaux — administrative districts. The area is 105 km² (kilometres) and with a population of 2.2mn, it has a density of about 20,755 [2022] people per km² — one of the highest in Europe.

The 11th arrondissement has the highest density of people at 39,317 in Paris with an area of 3.67 km²

France's capital city is the core of the Paris Region called Île-de-France with an area where about 12,395,148 population [2022] live – an estimated 12,012 km² Area. 1,032/km² population density [2022], and 12mn people living there.

The 20 arrondissements in 2017.

The area of the city of Dublin is 115 km² and the 2022 population was 588,233 [2022]. The density is 5,032 inhabitants per km².

The area of County Dublin is 921 km² and its population in 2022 was 1,458,154, giving a density of 1,581.5 per km².

The Dublin city boundary was extended to some of the new sprawling suburbs of the 20th century and today coincides with the area that is the responsibility of Dublin City Council.

European Union and three EFTA countries: The datasets are based on data from the 2021 population and housing census at the level of 1 km² grid cells.

Barcelona has an area of 104.4 km² and a population of 1,620,343. Density is at 16,000/ km². Within the city, L'Hospitalet de Llobregat has a density of 21,000/km².

This Royal Caribbean ship can accommodate up to a maximum of 6,988 passengers,
and 2,300 crew. Its maiden voyage was in March 2022

Teeming with tourists

In recent decades low-fare airlines, Airbnb and cruise liners have swamped old cities in Europe with tourists.

International travel is generally subject to zero VAT including supplies such as fuel and food.

In April the International Air Transport Association (IATA) renewed its call on the Colombian government to consider a reduction of VAT on tickets and aviation fuel to 5%. VAT increased by 14%. The finance minister said a cut could cost US$1.485bn and about 47,000 jobs.

Strong fortification walls have surrounded the summit of the Acropolis for more than 3,300 years.

The Greek cultural minister, Lina Mendoni, announced in early July “Visits in June and early July alone increased by 80% compared to 2019 (the year before the pandemic).”

A time-slot system, fast-lane entry points for organised tourist groups and electronic ticketing are moves that officials say will help alleviate visitor congestion.

The Acropolis attracts more than 17,000 people daily during summer time — a reflection of the over-tourism that has affected Greece in recent years.

In 2022 Greece was the third most-booked country on the planet and 9th most for UK travellers for the period July-August reports The Daily Mail citing stats from Skyscanner.

Venice has plans for a trial of a €5 (£4.30; $5.35) fee for daily visitors, in a bid to control tourism. Visitors over the age of 14 will have to pay the charge and book in advance. The system will be in operation next year.

Simone Venturini, a city council member said "Venice is among the most visited European cities... [and so] suffers the most from excess tourism."

In 2021 Italy banned cruise ships from the Venice lagoon. Unesco, the UN's cultural body, threatened to put Venice on its endangered list unless Italy permanently banned cruise ships from docking in the world heritage site, the government said.

Unesco says "Situated in the heart of a lagoon on the coast of northeast Italy, Venice was a major power in the medieval and early modern world and a key city in the development of trade routes from the east to Europe."

Venice is 7.6 km2 and had 13mn tourists in 2019 but that number of visitors is expected to be exceeded in coming years.

Tourists in St. Mark's Square, Venice during flooding in October 2018

In July Amsterdam's city council said it will bar cruise ships from docking in the city centre as part of a broader effort to curb pollution and reduce the large numbers of tourists who visit the Dutch commercial capital.

Holiday lets can be a lot more lucrative for landlords and this can also push up house prices.

Research from the University of Exeter reveals that passengers on a seven-day voyage around the Antarctic can produce as much CO2 as the average European does in an entire year. And that’s not all. The study also found that a large cruiseliner can have a bigger carbon footprint than 12,000 cars, while an overnight stay onboard uses 12 times more energy than a stay in a hotel.

Hallstatt, Austria, has just 800 residents but around 10,000 visitors a day

The Dutch government plans to reduce noise pollution and CO2 emissions at Amsterdam Schiphol Airport by cutting the number of flights from 500,000 to 452,500 annually from November 2024. That is 9.5% below 2019 levels and lower than a previous proposal of 460,000.

Trentino-Alto Adige is a region in northern Italy bordering Switzerland and Austria. Trento, the region's capital, has Renaissance palaces with frescoed facades and Buonconsiglio Castle, home to art collections.;

Earlier this year Arnold Schuler, the local tourism minister, proposed new regulations and told CNN that the region had hit the limit as to how much it could handle. Last year, the region saw 34mn overnight stays and, “At certain times of the year and in certain areas, it became a lot,” he explained.

“We reached the limit of our resources, we had problems with traffic, and residents have difficulty finding places to live,” Schuler explained, adding that their goal is to, “guarantee the quality [of life] for locals and tourists,” which has become progressively difficult in recent years

Trento is the main town of Trentino-Alto Adige in Northeast Italy

A new law in effect from September 2022, limits the approved number of overnight stays to what they had been in 2019, prior to the pandemic. It also bans any new traveller accommodations from opening (including private home rentals) without permission from their local authorities.

Schuler said the number of Airbnbs in the area has increased 400% over the past five years and he added. “We always said we want to be a region for tourists, but also a place where the local people live well.”

The number of officially registered and approved guest beds has been capped at under 230,000, which was the count back in 2019. Each town’s “comune” (local authority) will also be allotted a set quantity of extra beds to issue in special circumstances or to aid businesses in town that don’t get a huge amount of tourism. Exceptions can also be made if another lodging establishment closes down, thereby balancing out the equation.

This year the Portuguese government stopped issuing new licences for Airbnbs and other similar holiday lets except in rural areas.

All licences for holiday lets will now be reviewed every five years. A new system to control rental prices is also being introduced. Airbnb owners are also being offered a tax break if they convert their properties back into ordinary homes.

The minimum daily fee for foreigners in Bhutan is $250 (€228) per person

Bhutan is a Buddhist kingdom on the Himalayas’ eastern edge and it has a population of about 778,000.

Tourist taxes: All of the countries you will have to pay to enter in 2023 or 2024

For example in 2024, non-EU citizens, including Americans, Australians, Brits and other travellers from outside the Schengen Zone, will need to fill out a €7 application to get in.

The Schengen Area encompasses most EU countries, except for Bulgaria, Cyprus, Ireland and Romania. However, Bulgaria and Romania are currently in the process of joining the Schengen Area and already applying the Schengen acquis to a large extent. On 1 January 2023, Croatia became the newest member state to join the Schengen area. Additionally, the non-EU states Iceland, Norway, Switzerland and Liechtenstein have joined the Schengen Area.

Ireland is not in the Schengen Area as it has a Common Travel Area (CTA) with the UK.

Bigger chart and other details
In France, 80% of tourists visit just 20% of the country, as people flock to iconic attractions such as the Eiffel Tower and the French Riviera.

“France is the world’s main tourist destination, but we have a serious lack of data,” Olivia Gregoire, the tourism minister, told the Figaro daily.

The French tourism ministry in August projected expenditure by overseas tourists would reach €64bn-€67bn in 2023 after a strong summer season, a much-needed boost for an industry that was hard hit by the pandemic.

The number of international arrivals is yet to top the 90mn attained in 2019. Tourism is big business in France, where the industry employed more than 2mn people and generated 8% of the gross domestic product last year according to the Financial Times.

The top three are in France, Spain and Greece

Having attracted 66.6mn international visitors in 2022, France is now set to reclaim the title, with the number of international arrivals expected to grow at a compound annual growth rate (CAGR) of 12.1% between 2022 and 2025.

Between 2010 and 2021, France received an average of 77.7mn international overnight tourists per year.

The Republic of Ireland had 9.353mn tourist overnights in 2019. The UK was at 35%, including Northern Ireland.

For the EU-27 inbound tourism expenditure was worth €437bn in 2019. Five countries (Spain, France, Italy, Germany, and the Netherlands) accounted for two-thirds (65%) of this expenditure, while Ireland had a 2% share.

Check the chart on Page 6 of a publication of the World Tourism Organization (UNWTO), the UN agency.