Explaining the declined affordability of housing for low-income private renters across Western Europe.

The private rented sector (PRS) recently enjoyed a revival, in particular in the years before and after the Great Financial Crisis (GFC). At the same time however, affordability concerns have come to the fore. The main aim of this paper is to explain trends in housing affordability for lower-income households in the PRS across Western European countries, from a supply versus demand perspective. To this end we: (1) related trends in housing affordability to wider changes in housing systems, welfare regimes, demographic indicators and housing market financialisation; and (2) decomposed affordability trends in terms of rents and incomes, controlling for compositional shifts. We incorporated the spatial dimension by distinguishing between urban and rural regions. Although we could not explicitly test for the more fine-grained mechanisms relating housing market financialisation to increased 'unaffordability' of PRS-housing, our findings nevertheless warrant future research into this topic. In particular in countries with strong financialisation (Ireland, the Netherlands, Spain and Portugal) decreasing affordability arises from the fact that during the period 1995-2007 private rent increases were not compensated for sufficiently by income growth. We furthermore found that across urban regions, between 1995 and 2007, affordability worsened through demand pressure arising from in-migration. Changes after the GFC (up to 2013) were more limited and diverse.