Housing regimes and approaches to housing affordability : a comparative housing study of Amsterdam and Toronto

Andres Griffiths 12239968

Housing regimes and approaches to

housing affordability

Table of Contents Abstract

Introduction I.

The global housing affordability crisis Housing and financialization

The failure of market-based measures The political economy of housing II.

Pathways and housing regimes Comparative process tracing

Using CPT to investigate housing regimes and affordability measures Case studies

Primary research

Housing regime outcomes III.

CPT analysis

Pathways of Amsterdam’s Housing Regime Pathways of Toronto’s Housing Regime Conclusion & Discussion

Abstract

This thesis will utilize comparative historical analysis to understand and explain the divergence in housing policy and approaches to housing affordability between three global cities. Using the comparative process tracing methodology by Bengtsson & Ruonavaara (2011) it will explore how housing regimes came to be, how they have evolved and the outcomes these have produced, with a focus on housing affordability measures and what policies are in place to moderate the impacts of financialization. The case studies of Amsterdam and Toronto reflect the unique pathways of each state and regime they fall within, despite facing similar economic and population trends in recent years.

Introduction

The world is facing an urban housing affordability crisis (Wetzstein, 2017; Szumilo, 2019). From Singapore to London, Sydney to Vancouver, headlines continuously announce record-breaking housing prices, and the housing costs that seem on the path to “fully and indefinitely decouple from incomes” (Fernandez & Aaalbers, 2016, p. 72). Civilian movements against skyrocketing living costs have become a dominant political force, forcing governments to reverse tax hikes, introduce rent freezes and expropriate private rental housing (Nossiter, 2018; Forrest, 2019). A rapidly growing and urbanizing population and the devolution of housing provision to the free market has brought about a housing crisis in global cities around the world, where both talent and investment have been consolidated (Forrest, 2008; Rolnik, 2013). As housing-related expenses balloon, the number of households forced to live in substandard conditions is expected to increase to half a billion worldwide in the next decade despite rapid economic growth

Housing has long been a dominant force in shaping power relations as regimes have explored various avenues of provision and regulation (Schwartz & Seabrooke, 2009; Forrest, 2008; Kemeny, 1995). In the postwar era, housing provision was a cornerstone of welfare and social development in rich countries (Kemeny, 1995). In recent decades, however, a global shift towards neoliberalism has reinterpreted what was once seen as a human right to be a fiercely commodified product (Rolnik, 2013). Housing’s embeddedness within neoliberal capitalism remains understudied despite being inextricably linked with this new regime of accumulation (Fernandez and Aalbers, 2016). Housing - and real estate in general - have seemingly replaced gold as a means to store wealth (Aalbers, 2015; Rolnik, 2013). The forces of globalization and neoliberalism have led some to believe that national housing policies to be more and more

“internationally synchronized” (Aalbers, 2015, p. 44). It is apparent that rich countries have all to some extent liberalized their housing and financial markets (Schwartz & Seabrooke, 2009). However, these macro level forces are not enough to erode the historical and social contexts that have produced housing systems that are largely unique to their local context. Although the housing affordability crisis has pushed many lower- and middle-income people to their limits in cities across the globe, the options people have and approaches that governments have to this crisis vary widely. Among economies at similar levels of development there remains continued divergence in housing policy, something that has become even more apparent after the Global Financial Crisis (Kemeny & Lowe, 1998; Schwartz & Seabrooke, 2009; Oxley & Haffner, 2012; Aaalbers, 2017).

This thesis will explore how the relationship between housing and the global economy has driven the global housing affordability crisis and investigate how policy environments shape housing contexts in a comparison of two global cities. It will have be divided into three general sections:

a theoretical background of housing affordability; conceptual framework and introduction of the case studies for the comparative housing study, and an analysis and discussion of the research.

I.

The global urban housing affordability crisis

It is clear that the world faces an urban housing affordability crisis. But what exactly does this mean? And why has it occurred? At its most simple, the notion of housing affordability is linked to income – and this crisis has stemmed from average housing costs growing exponentially faster than average incomes (Ortiza & Johannes, 2018; Wetzstien, 2017; Fernandez & Aaalbers, 2016). Affordability has been defined by the United States’ Department of Housing and Urban

Development (HUD) as housing costs (such as rent or debt servicing) being no greater than 30% of household income (Joice, 2014). Similar benchmarks around the rich world are used for housing policy (Malpass, 1999; Moore & Skaburskis, 2004; Czischke & van Bortel, 2018). The cost-to-income ratio has been criticized as being a simplistic, insufficient basis for policy (Haffner & Heylen, 2011; Gan & Hill, 2009; Hancock, 1993), but in this paper, where it will be used as a means of illustrating the disconnect between the cost of shelter and the average person’s ability to pay for it, it is sufficient.

Using the cost-to-income yardstick for affordability, we can look at trends in recent decades: in Canada, between 1989 and 1999, the number of households spending more than 50% of their income tripled to 13.6% of the total population (Moore & Skaburskis, 2004); in the United States this number of rental households was 20% in 1999 (Freeman, 2002); in the EU-28, the 11.3% of

households spent 40% or more of their income on housing (Czischke & van Bortel, 2018). What does this do to our societies? Housing affordability has profound impacts on health – it is linked to physical, behavioural psychological health consequences (Ortiza & Johannes, 2018). This leads to higher spending on healthcare and other public services, homelessness (Maqbool et al., 2015). Studies have also found that the housing affordability crisis can have significant economic impacts beyond higher public sector costs; it can limit productivity growth as it constrains labour supply and migration (Szumilo, 2019). The stakes are clearly high, but how can governments and societies deal with such a vast problem? One could begin by understanding how this affordability crisis came to be.

Housing and financialization

Looking at housing price trends, we can see that growth has been occurring for decades – this growth has been “at the centre of economic and societal transformation in almost all advanced economies since the 1980s” (Lennartz et al., 2018, p. 1). The 1970s was when neoliberalism began its hegemony on the global economy – it was following this that housing costs began to rapidly escalate. Housing has been clearly impacted by the global adoption of neoliberal

economic policies – but exactly how? Let’s begin by defining a new term, one that is refers more specifically the social and economic transformations that have occurred in the neoliberal era - financialization. It can be defined as the “growing influence of capital markets, their

intermediaries, and processes in contemporary economic and political life” (Pike & Pollard, 2010, p. 30). This term that gained prominence after the Global Financial Crisis (GFC), as an attempt to understand the dominating power the finance sector has had in some of our largest economies. In the financialized world, regulatory environments are largely market driven, with the private sector exhibiting ever-increasing influence over states (Rolnik, 2013; Forrest, 2008).

In this “structural transformation of economies, states and households” (Fernandes & Aalbers, 2016, p. 72), states emerged largely as facilitators rather than actors in the provision of housing (Gotham, 2006). The onus of providing housing fell primarily to the private sector, while governments became primarily regulatory bodies, still powerful, with the ability to make or break markets, opportunities, and crises (Gotham, 2006).

Beyond encouraging the withdrawal of states from housing production, financialization has driven the cost of housing in a number of key ways. Deregulation of the finance sector has led to the creation of the modern mortgage market, first by allowing large banking institutions to enter a space once only occupied by specialized institutions such as credit unions or mortgage banks (Aalbers, 2015). These large financial institutions had the capability to provide wider access to borrowing, bringing homeownership to a broader class of people, driving up the demand for market housing (Schwartz & Seabrooke, 2009; Fernandes & Aalbers, 2016, Aaalbers, 2015). Economies with the most liberalized financial systems had the most pronounced price growth. In rich countries, housing values jumped by one-third ($20 trillion USD) between 2000 and 2003 alone (Rolnik, 2013). Macroeconomic trends such as rising incomes and increasing participation of women in the workforce allowed for higher loan servicing ability, while policies such as mortgage securitization have allowed financial institutions to minimize and export risk,

increasing their capacity to lend (Schwartz & Seabrooke, 2009). This policy in particular made it possible for financial organizations to transfer the risk of mortgages to institutions like insurance companies and pension funds, allowing them to lend more freely and at lower, fixed interest rates, and as such was a great contributor to the US subprime mortgage crisis (Schwartz & Seabrooke, 2009.

The financialization of housing began in English speaking countries with historically strong finance sectors, such as the United States and the United Kingdom but has since globalized. It has spread, albeit in varying degrees, to all OECD countries, and developing economies following more recently (French et al., 2011; Fernandez & Aalbers, 2016; Schwartz & Seabrooke, 2009). In Germanic and Northern European countries with historically large non-market and rental housing sectors, owner-occupancy rates have increased drastically in recent decades, at the expense of the aforementioned sectors as governments have liberalized housing markets and encouraged homeownership (Lennartz & Ronald, 2017). Societies with traditionally strong welfare states and non-profit housing sectors such as Denmark and the Netherlands have seen some of the most rapid growth in mortgage markets, with both examples approaching 100% of GDP (Schwartz & Seabrooke, 2009; Van Duijne & Ronald, 2018). This has coincided with a general trend of declining or limited investment in social housing globally (Wetzstein, 2017).

Financialization has not only blurred borders through global market liberalization. Since the 1970s, capital rapidly became liquid and global, allowing it to by easily transferred across borders. Housing has since found a new use beyond shelter: it has become a dependable, stable investment; ‘safe deposit boxes’ for the wealthy (Fernandez et al., 2016, p. 2444). Certain housing markets, primarily those in leading global cities, have become hubs for speculation by investors, commodifying housing (Rolnik, 2013). Now, those seeking shelter must compete with institutions, transnational elites, and small-scale investors to purchase or lease a home. A

somewhat symbiotic relationship between a city’s success and rising housing prices has emerged, where these ‘successful cities’ receive a disproportionate amount of investment and population growth in comparison to their less established peers (Rolnik, 2013). In a global context where cities actively compete to attract investment and talent, by spending on livability,

infrastructure measures, or risk missing out on growth, real estate development, particularly ‘iconic’ projects built for elite interests have become seen as hallmarks of a city’s success (Kaika, 2010; Florida, 2012). The intertwining of real estate with global financial markets now also means that local events can produce “prodigious global consequences” (Gotham, 2006, p. 269) – again, the most obvious case being the GFC spurred by the US subprime mortgage crisis.

The failure of market-based measures

Housing price trends have shown that market-driven interventions in housing systems have had little success in alleviating affordable housing shortages, particularly in global cities where economic activity continues to concentrate (Rolnik, 2013). Thus, in this study, approaches to housing affordability refers to the set of policies that aim to moderate the impacts of the commodification of housing such as providing sub-market rental housing (Czischke & van Bortel, 2018) or measures to moderate financialization locally (Schwartz & Seabrooke, 2009). Taking this generalized view means that housing affordability measures are not limited to social housing that is now largely aimed at lower-income households. This includes measures aimed at middle-income households in the high-cost housing markets of global cities that have in recent decades, due to changes in income cut-off eligibility and housing types, largely left out of affordable housing (Czischke & van Bortel, 2018). Schwartz & Seabrooke (2009) found that societies that experienced the least pronounced housing price growth had the highest degree of financial repression, or regulation.

This variation in the extent of market liberalization between rich countries often defines the depth of affordability issues and interventions to address them (Schwartz & Seabrooke, 2009). Germany has been maintaining relatively stable housing costs nationally by imposing a greater

degree of financial repression compared to most OECD countries, such as more conservative regulation on mortgage markets, and wider subsidies to the rental sector (Schwartz & Seabrooke, 2009; Muellbauer, 2018; Voigtländer, 2014). The Netherlands still has a relatively high

proportion of its population living in social housing, particularly in its big cities, and there are recent efforts to ramp up the supply of affordable housing (Van Duijne & Ronald, 2018). Given that capitalism relies upon inequalities and power relations to maintain profitability, there will always be a disadvantaged group which cannot access (affordable) housing. In the contemporary context this demographic is rapidly growing. As Kemeny (1995) suggested, governments will always face pressure to alleviate the impacts of for-profit housing, whether through the creation of a residualised non-profit market, or through allowing competition with the for-profit sector. Both of these approaches ‘de-commodify’ housing, as it provides alternatives to access shelter beyond market means.

The political economies of housing

Political economists, in their study of power relations and the world economy, believe economics to be entangled with politics; they cannot be separated from each other and must be thought of as part of the same equation (Drazen, 2003). Housing, or the basic human need for shelter, in its core importance in society has long shaped our political economies. If housing systems were merely an exercise in economic policy, then all countries would have identical approaches to housing. Yet, there has been and remains huge variations in these approaches. The provision of housing and housing affordability measures, whether through market or non-market related means are a reflection of strategic policy directions chosen through a particular political agenda. Kemeny (1995) argued that in democracies, these policy strategies and their entrenchment are particularly rooted in how societies have constructed housing as a concept; despite the universal

need for housing, there has long been a divergence in how housing is treated and viewed in different societies (Kemeny & Lowe, 1998). In the United States, housing has long not only been seen as a means for shelter but also as a vehicle for class mobility – since the 1930s

homeownership has been focal to the post-Fordist capitalist mantra of profiting from

commodified necessities (Ivanova, 2011). In the social market economies within the Germanic sphere of influence, the housing sector did not become a sector driven purely by “profit-making principles” (Kemeny, 1995, p. 16) – rather, a non-profit sector remained in direct competition with a for-profit sector to regulate housing costs and generally discourage homeownership.

Prior to the financialization and commodification housing in the Anglosphere in the 1980s, governments throughout Western Europe and North America provided vast amounts of non-market housing (if this was built in the contemporary context, we would think of this as de-commodified housing). Governments were determined to restore living standards after the destruction of World War II - this was done primarily through the establishment of large non-profit housing sectors (Kholodilin, 2017; Van Duijine & Ronald, 2018). States funded and built a variety of non-market housing types, such as social housing, aimed at the lowest income earners, affordable housing for workers, and cooperative housing for alternative lifestyles. This was a reflection of the Fordist economic policies of that time – a period characterized by mass production of housing for the working and middle class - influenced by the regime of accumulation at that time (Aalbers, 2015). However, this period was followed by economic slowdowns in the 1970s and wartime debts put pressure on states to reduce spending. Neoliberal policies advocated by the United States, the primary creditor of these debts, and the United Kingdom, its key ally in Europe, became widespread as a means to reduce state debt and boost

economic growth. The provision of housing was almost entirely pushed onto the private sector in countries that enacted these policies (Rolnik, 2013).

With the rapid rise in the value of real estate, the political economies of industrialized nations have become hugely influenced by the homeowning class (Rolnik, 2013; Fernandez & Aalbers, 2016; Wetzstein, 2017). Housing accounts for a vast majority of household wealth – and as we have seen, the commodification of shelter has proven to be a profitable venture for many – so homeownership continues to attract a majority of the population that is interested in building wealth (Forrest, 2008; Schwartz & Seabrooke, 2009). Homeowners supported lower taxation and welfare spending to protect their investments, and states wanted to reduce spending, particularly on welfare programs – this laid the grounds for the emergence of the ‘asset-based welfare’ (ABW) approach (Lennartz & Ronald, 2017). Through subsidies and reduced barriers to

mortgages, individuals were encouraged to accumulate wealth through homeownership in order to provide financial security for retirement, intensifying price pressures on housing. This took the place of pensions and other state welfare provisions (Lennartz & Ronald, 2017). While ABW has been most pronounced in Anglo-Saxon states, it has also become prevalent in countries with historically strong non-profit sectors. In Netherlands, for example, home ownership rose from 45% to 60% since 1990 (Van Duijne & Ronald, 2018). Similar trends have occurred in Ireland, Australia and Denmark, while aggregate mortgage debt has increased in almost all developed economies (Lennartz & Ronald, 2017). One key vehicle promoting ABW has been the

privatization of social housing. It has fuelled the Netherland’s rapid rise in homeownership, first popularized by the Thatcher Government in the 1980s. ABW has become widespread in Europe, even in countries once dominated by Russian and German influence (Kemeny, 1995). Nearly $1 trillion worth of public housing was privatized between the 1990s to 2000s (Rolnik, 2013).

While sizable non-market housing sectors have remained in Northern European countries, there has been a considerable rise in homeownership in these countries (Lennartz & Ronald, 2017). Indeed, Castles (2005) that the in five countries with the most established non-profit rental markets – Sweden, Denmark, the Netherlands and Germany – all have seen substantial

reductions in welfare spending, with the Netherlands in particular having the greatest reduction in welfare spending in the OECD between 1980 and 2001. It is clear that there has been a shift in the political economy from the pre-1980s period.

Overall, we have seen a reduction in size of states, particularly in their spending on social welfare programs, in favour of market friendly measures. But while we have seen states become less of an actor, both within the realm of housing systems but also in more general means, the state remains powerful in its regulatory role, holding the power to make or break markets and opportunities (Gotham, 2006). Governments still have the means to interfere in housing markets, by introducing policies and interventions to improve housing affordability. Housing affordability is once again at the top of many political agendas, with some incumbents and candidates

promising relief through subsidies in Canada, tax credits in the United States, supply measures in the United Kingdom and rent-freezes in Germany (Rubin, 2019; Collinson, 2019; Fessler, 2019; Forrest, 2019). There are clear differences between these approaches, one that can only be understood through their socio-political contexts.

Pathways and housing regimes

Having gone through an overview of the wider reasons that the world has reached an urban housing affordability crisis, we have yet to understand why housing systems and their outcomes remain different, in spite of our borderless, financialized world economy. Peck et al. (2009) argue that this is because neoliberalism, and by association the process of financialization, is “introduced within politico-institutional contexts” (p. 54). We have seen how economic policies are driven by politics, in turn shaped by local environments; as such, neoliberalism in reality exists in an uneven manner, or what Peck (2009) describes as due to the “contextual

embeddedness of neoliberal restructuring” (p. 52). What exists – ‘actually existing

neoliberalism’ as termed by Brenner & Theodore (2002) – is a result of historical processes that have shaped institutions in particular ways. These historical processes are the pathways that have come to define each context. Pathways are economic and social, political and institutional, all part of the DNA that makes each example unique. This focus on pathways and context can be used to further understand why different countries, and even within those countries, different cities, approach housing in different ways. Comparing different housing systems could offer insight on successful policy approaches to housing affordability, and with an understanding of policy pathways, whether these approaches could be transferrable. Two key schools exist comparative housing studies: the divergence approach, that believes that housing systems are diverging, and the convergence approach, which believes the opposite. Convergence analyses, criticized for its oversimplification and redundancy, have understandably come to be

overshadowed by divergence analyses (Kemeny & Lowe, 1998). However, while divergence scholars acknowledge that housing regimes are different by nature, a number of divergence scholars still fail to explain why these differences have occur, primarily because they view housing regimes and the institutions that govern them as static (Blackwell & Kohl, 2018). This is

why an understanding of pathways and how these housing regimes have come to fruition is essential. It allows us to fill these gaps in understanding (Blackwell & Kohl, 2018). Such longitudinal, path-dependent approaches in comparative housing studies have so far been rare, but some examples of frameworks will be discussed in a following section (Bengtsson & Ruonavaara, 2011; Blackwell & Kohl, 2018).

Kemeny (1995) emphasized the importance of socio-political contexts of housing systems, laying the groundwork for comparative housing studies. With the notion that housing is integral to welfare systems, as it has shape society’s dependence on welfare systems and resultant power structures within that society (Ronald, 2008), Kemeny built upon Esping-Andersen’s (1990) Three Worlds of Welfare Capitalism. This suggested that socio-political contexts and their resultant power structures were the most “decisive cause of welfare state variations” (Esping-Andrersen, 1990a, p. 2). Esping-Andersen distinguished three types of ‘welfare regimes’ – social democratic, conservative and liberal. ‘Regime’ encompasses the social, political and economic contexts that characterize these systems. For Kemeny (1995) there existed two broad ‘housing regimes’ – on the one hand a unitary system in which a non-profit housing sector competed directly with a profit housing sector, and on the other a dualist system which protects the for-profit sector by residualizing the non-for-profit sector. This categorization of housing systems – from now on will be referred to housing regimes - allowed for comparative housing studies to develop. The implications of these housing regimes are called ‘housing outcomes’. These outcomes, most simply manifested in tenure choices, have “huge and important societal consequences” (Kemeny, 1995; Castles, 2005, p. 84). Within these regimes are policy frameworks that states introduce to address perceived problems within housing systems (Oxley & Haffner, 2012). As states became democratized beginning in the 19th _{century, the provision of affordable housing became a key}

political issue, and in the postwar era, this occurred at an even larger scale (Esping-Andersen, 1990a). From this view, the types of policies aimed at providing affordable housing are especially rooted in their welfare state context, accounting for the considerable variations in approaches among developed economies. There are also considerable differences in outcomes of welfare systems, a result of varying entrenchment in their respective societies (Esping-Andersen, 1990b).

In 2009, shortly after the GFC, Schwartz & Seabrooke modernized the housing regimes model adjusting for the impacts of over a decade of financialization. They proposed four regimes: corporatist, liberal, statist-developmentalist, and catholic familial. These typologies arose from comparing owner occupation rates and mortgage-to-GDP rates. They integrated Varieties of Capitalism (VoC) approaches into the housing-welfare state question, contributing to the

growing consensus that housing has emerged as keystone to the financialized world, and argued that housing must be a key focus of capitalism studies. Echoing Kemeny’s emphasis on of the importance of housing in political economies, Schwartz & Seabrooke (2009) resolved that housing outcomes drive the type of government people want and vote for; homeowners favoured lower taxation, inflation and public spending, while tenants were far more in favour of

redistributive measures. Thus, housing outcomes could be a cause for the huge variation in the support for welfare systems throughout the world, both within and between societies (ibid.). However, even in societies where redistributive values are most embedded – the corporatist and statist-developmentalist countries - there has been a dramatic rise in the commodification of housing, and consequently diminished affordability (Lennartz & Ronald, 2017). Meanwhile, in homeownership societies such as the United States, candidates like Bernie Sanders who are advocating for a dramatic increase in welfare spending are winning over the millennial vote

(Golshan, 2019), perhaps a clear symptom of housing affordability issues and a shifting away from homeownership.

We have seen how understanding policy environments must be done through taking “account of both specific national economic and political factors and wider forces at work in the global economy” (Malpass, 1992, p. 881). Through these contextual studies, one can begin to grasp and challenge the entrenchment of these policies (Kemeny, 1995). It is also important to take a comparative, international perspective to shed light on and further comprehend the wide variation in housing policy approaches (Oxley & Haffner, 2012). In this light, comparative studies can be essential to fulfill ambitions of studying policy solutions and their transference, developing of new approaches and expanding the breadth of housing studies (Oxley & Haffner, 2012).

Comparative process tracing

The benefits of historical analysis have been well discussed. Investigating pathways

simultaneously with comparative housing research however can present some logistical and theoretical challenges. Historical analysis, after all, can be a messy process particularly if is not informed by conceptual framework to organize its results. One relevant framework is the comparative process tracing methodology for comparative housing studies by Bengtsson & Ruonovaara (2011, 2017). It adopts path-dependency, which can be defined as the “historical sequences in which contingent events set into motion institutional patterns or event chains that have deterministic properties” (Mahoney, 2000, p. 507), to comparative housing studies. These authors have developed a process that includes two key steps: first, a pathways analysis of two or

more cases, and second, a comparison of these pathways informed by periodization of the historical research, identified mechanisms and counterfactual analysis (see figure 1).

Process tracing is at its core longitudinal research design that aims to identify sequences or a series of events that have resulted in a particular pathway – in this case the pathway of housing regimes (Bengtsson & Ruonovaara, 2017; Waldner, 2012). It is “an attempt to reconstruct as closely as possible the chain of … mechanisms which leads from the situation at point A to the situation at point B” (Bengtsson & Ruonovaara, 2011, p. 10). Counterfactual analysis questions what would have happened if there was a deviation in a pathway, or what the pathway would be if an event had happened (Bengtsson & Ruonovaara, 2017). This component allows one to test hypothesis and explore relationships between variables.

Process-oriented step

Pathways research

Comparative step

Identified mechanisms

- critical junctures - political focal points - social mechanisms

Comparative step

Periodization

Comparative step

Counterfactual analysis

Figure 1. Comparative process tracing (CPT)

Through a closer look at the identified mechanisms component, one can see that the CPT framework is actor-based rather than institution-centred. It focuses on how social, political and economic outcomes are shaped by relationships and actions of actors (Bengtsson & Ruonovaara, 2017). In contrast, institutionalist studies view institutions as static bodies that remain constant throughout history and are not sensitive to politics and other human inputs; this type of study is common among scholars of divergence school (Bengtsson & Ruonovaara, 2011; Blackwell & Kohl, 2018). An actor-based approach encourages a deeper understanding of the social processes shape policy pathways. CPT’s identification of critical junctures emphasizes the agency of actors to choose and thus determine these pathways. The authors also note that these junctures are separate phenomenon from political focal points, as actors are not always driven by public politics, and social mechanisms, which are ongoing patterns (rather than singular events) of actions and interactions that shape actors’ decision making (Bengtsson & Ruonovaara, 2017).

Using CPT to investigate housing regimes and affordability measures

This thesis will investigate housing regimes in three global city contexts with the goal of identifying housing affordability measures and their transferability. The research design will be theoretically informed by CPT and the four housing regime types identified by Schwartz & Seabrooke (2009). It is hoped that a more nuanced understanding on the nature of housing regimes and what has shaped them can allow us to make more informed economic and social policy directions. This study also aims to work towards both the need for further study on intersection of housing, society and economy and the lack of focus on housing in literature on capitalism and financialization identified by various authors (Fernandez & Aalbers, 2016; Schwartz & Seabrooke, 2009).

As previously noted in figure 1, CPT has two main steps: the process-oriented step and the comparative step (Bengtsson & Ruonovaara, 2011). Vital to organizing the historical research is its periodization. The authors suggest the following periods in the development of a housing regime: establishment, construction, management, retrenchment or (and?) privatization periods (ibid., p. 13-14). However, this research design was formulated around a comparative analysis of Nordic housing systems and for the purposes of this study too specific to that context. Instead, this research design will integrate the periods suggested by Aalbers (2015), which was designed for a study of financialization of housing. There are four periods: (1) the modern period, pre-1930s, (2) the Fordist period, 1940s-1960s, (3) the neoliberal period, 1970s-1990s, and (4) the late neoliberal period, 2000-present (p. 44). Similar to that study, this thesis will focus on the last three periods, with an overview of the first period to provide historical context. Aalbers (2015)

Figure 2. The four housing regimes.

was a moment in which there was significant attention from academics and political pressure on the state of housing and the economy, and thus a shift in the trajectory of global housing policies.

As such, this study’s research design has three key aims: to understand the pathways of these housing regimes, to compare these pathways and outcomes of said housing regimes and to demonstrate the outcomes of these housing regimes. It will compare three case study cities – Amsterdam and Toronto – both representing a distinct type of housing regime but undergoing similar demographic changes. The research questions follow:

Thesis question:

How do pathways shape various housing regimes, and how has this impacted their approaches to affordable housing?

Sub questions:

Ø What are the pathways of housing regimes in Amsterdam and Toronto?

Ø To what extent do approaches to housing affordability reflect housing regimes in Amsterdam and Toronto?

Ø How have these housing regimes moderated the financialization process? Case studies

This thesis will compare two case study cities, both representing a distinct type of housing regime but undergoing similar demographic, economic and physical changes. While housing regimes are primarily shaped by state-level socio-political contexts, the selection of case studies at the city scale allows us to understand how macro-level policies are played out on the ground

level. Case studies are “detailed examinations of a single example” (Flyvberg, 2016, p. 220) allowing for expert knowledge, theory-building and a means to explain phenomena through a narrative (ibid.). Building upon a foundation of quantitative data comparison, in-depth qualitative case studies will allow us to tackle the research questions presented above. The case studies are the largest cities in high-income, advanced economies. Amsterdam is in a corporatist housing regime, Toronto is in a liberal housing regime according to Schwartz & Seabrooke (2009). These case studies were selected through the critical case selection sampling method, as each city offers “strategic importance in relation to the general problem”, which for this research, is

understanding how varying contexts produce varying outcomes (ibid., p. 229). These cities have been facing rapid housing price growth in recent years, but as each city has been shaped by unique socio-political contexts, their institutions are addressing the issues these trends have brought in different ways.

Amsterdam

Amsterdam presents a contrast between its historically predominant non-profit housing sector and recently liberalized has become characterized by rapidly declining affordability for market housing (Van Duijne & Ronald, 2018). Market-oriented policies introduced by the national government have resulted in a sizable privatization of social housing units and a rapid increase in

Amsterdam Toronto

Metropolitan population 2.4 million (2018 est.) 6.8 million (2018 est.)

Growth rate (%) 1.07% (2018) 2.6% (2018)

Housing regime type corporatist liberal

Figure 4. Summary of case study cities.

Sources: Amsterdam Economic Board (2019); CBS (2019); Ontario Ministry of Finance (2019); Statistics

home ownership rates at the expense of the non-profit housing sector (Van Duijne & Ronald, 2018).

Toronto

Toronto has experienced rapid population growth fueled by high levels of immigration

contributing to a political economy strongly defined by globalization and growth-oriented policy. A lack of investment in social housing and recent regime changes leading to the discontinuation of universal rent control have contributed to an escalating affordability crisis. It has one of the world’s highest proportions of foreign-born residents and is the fastest growing metropolitan area in North America, estimated to attract between 125,000 and 167,000 new immigrants annually (Good, 2011; Clayton & Shi, 2019; Petramala & Clayton, 2019).

Primary research

Expert interviews have been employed to serve as a verification process for the historical research. Experts were selected for each city from a cross-sectional sample of policymakers and housing specialists. The interviews were conducted in May 2019 in person or over the phone, individually. The interviewees were asked to identify critical junctures, power relations, periods and mechanisms from their own perspective, and these were compared with findings of the process tracing methodology. The interviews also explored the contemporary contexts of policymakers in the case studies, and the key challenges they face. In a semi-structured format, the interviewees were posed questions asking for their views on the strengths and limitations of these regimes, key challenges, future policy pathways, their views on affordability issues and how to address them, external factors impacting these housing systems, working with other stakeholders, among other topics.

List of Interview Subjects

Role Organization

Amsterdam Senior Policy Advisor Amsterdamse Federatie van

Woningcorporaties (AFWC) Research and Development Coordinator,

Municipal Land Department

Gemeente Amsterdam Chief Urban Planner,

Physical Planning Department

Gemeente Amsterdam

Toronto Housing Project Manager,

Strategic Initiatives Policy Analysis

City of Toronto

Senior Policy Advisor Ministry of Municipal Affairs & Housing

Executive Director Federation of Metro Tenants’ Associations

Legislative & Policy Advisor, Opposition Critic

Ontario Provincial Parliament

III.

CPT analysis

This section will begin with an overview of the pathways of the two case studies, organized into the four periods of housing financialization suggested by Aalbers (2015). The next section will be the comparative investigation, with a discussion of identified mechanisms and counterfactual analysis. Quantitative indices will supplement the comparison and provide an overview of housing regime outcomes. Quantitative indicators allow for an illustration of housing regime outcomes in an objective way and helps address inconsistent definitions across supra-national contexts (Oxley & Haffner, 2012). Data will be as recent as from 2018, obtained from Geemente

Amsterdam, the City of Toronto, CMHC, Statistics Canada and AFWC.

Pathways of Amsterdam’s Housing Regime Pre-modern period (Pre-1930s)

The beginnings of Amsterdam’s housing regime can be traced to the Dutch Housing Act of 1901 that first introduced planning controls and regulation on the expansion of towns (Davies, 1988). Rapid economic growth at the end of the 19th _{century had led to profound housing shortages and} deteriorating living conditions as Amsterdam’s population doubled to 500,000 (AFWC, 2017). The Housing Act also paved the way for government loans to housing associations (HAs), who were formed by people from certain sectors of society – for example, there was an association for railway workers, one for Catholic workmen, and so forth. Although somewhat similar in their social makeup, these associations were distinct from housing cooperatives, as residents did not share ownership. In 1911, an association of HAs was formed – the Amsterdamse Fedaritie van Woningcorporaties, or AFWC – beginning the coordination of Amsterdam’s housing system (ibid.). Construction was severely limited during this period as costs of materials skyrocketed during World War I and II, but both the Municipal Housing Agency and HAs did provide some new supply (ibid.).

Fordist period (1940s-1960s)

The Fordist period was characterized by wartime recovery and a huge ramp up in the construction of housing. The Municipal Housing Agency, with support from the central government, contributed to much of housing construction in Amsterdam, but by the 1950s a proposal by the AWFC to take over the provision of new housing in Amsterdam had been accepted by authorities, as the different HAs argued that they were better suited to provide

housing to local contexts (AWFC, 2017). Although HAs had been providing a bulk of housing development, this signalled a shift in Amsterdam’s housing regime as the government solidified its support of HAs. The housing built by HAs was almost entirely social rental housing – it accounted for 90% of the housing constructed in Amsterdam between 1945 and 1985 (Kadi & Musterd, 2015). Between 1945 and 1975, the share of social housing nationally grew from 12% to 45% (Boelhouwer & Priemus, 2014).

This growth in social housing reflected the Dutch government’s commitment during this period to affordable housing for all households (Van Duijne & Ronald, 2018). Support for affordable housing was non-partisan in the 20th _{century, with parties across the political spectrum believing} that access to adequate housing guaranteed a certain standard of living for all citizens and was a core aspect of the Dutch welfare state (Van Duijne & Ronald, 2018). This large-scale production of social housing coincided with much of Western Europe at the time, as part of wartime

recovery efforts (Boelhouwer & Priemus, 2014). However, the context of the Netherlands was unique as social housing stock was privately owned, albeit subject to detailed regulations and agreements between authorities and HAs. This period also demonstrated the centralization of Dutch governance, both in the realm of housing and in public policy in general, as they maintained strong hands in the operations of HAs (Aalbers & Holm, 2008).

Neoliberal period (1970s-1990s)

Similar to many Western European housing regimes, the Fordist period left Amsterdam with a legacy of affordable housing that was accessible to broad spectrums of the population. This was challenged in the 1970s when an economic slowdown began to cause a shift in housing policy throughout Europe. Disinvestment in and privatization of social housing began to take hold, led

by Margaret Thatcher and the United Kingdom (Muellbauer, 2018). However, the Netherlands resisted this direction longer than most other European countries (Boelhouwer, 2007). It had maintained a very high proportion of social housing stock, at around 44% at the beginning of the of the 1990s, compared to most Western European countries that averaged under 20% (ibid.). Amsterdam had an even higher proportion its housing stock as social housing, at 58.5% in 1995 (Kadi & Musterd, 2015), and over 90% of private rental housing in Amsterdam were regulated (Boelhouwer & Priemus, 2014). The share of owner-occupied housing in Amsterdam remained quite low, at just 11.3%, similar to the national figure in 1990 of 14% (O&S, 2015; van Kempen & Priemus, 2002). As such, housing in Amsterdam remained largely de-commodified.

However, the Netherlands was not exempt from the economic pressures of that period and population growth had slowed reducing pressure to build more housing. In 1989 neoliberalism appeared in the Amsterdam housing regime as the Dutch government began to withdraw funding for social housing development; by 1995 the central government had cut subsidies and funding for HAs altogether (Aalbers & Holm, 2008). This was accompanied by a severe reduction in direct subsidies to renters (Kadi & Musterd, 2015). Although always ‘private’ organizations, HAs had been supported by the central government; the sweeping changes of 1995 left them to finance new construction and maintenance of their properties on their own (van Kempen & Priemus, 2002). The direct result of these changes was that the proportion of de-commodified housing built in the Netherlands fell from 80% of new rental housing in 1993 to 55% in 1998 (Kempen & Priemus, 2002). A new agreement between HAs and the central government was formed: HAs had their public debts written off, assumed ownership and all their real estate assets and were legally declared non-profit organisations with “subject to a legal requirement to

support affordable rental housing for market excluded households” (Van Duijne & Ronald, 2018, p. 638). As they were required to raise funds from the privatization of social housing units and new housing developments, HAs found themselves in the unique position of becoming ‘hybrids’ between market players and state providers (Van Duijne & Ronald, 2018). It was during this period that the proportion of social housing began to fall, as

Late neoliberal period (2000s-present)

The contemporary period has been another one of profound changes in the Amsterdam housing regime. In 2001, the Promotion of Homeownership Act spelt out the national government’s plans to have 60% homeownership rate by 2010 (Kadi & Musterd, 2015); similarly, the national centre-right VVD party continued to pressure HAs to privatize social housing units (Boelhouwer & Priemus, 2014). Meanwhile, in efforts to pool together portfolios and capitals, HAs throughout the Netherlands merged, growing from once local players within communities and municipalities to having assets across the country (Aalbers et. al., 2017). Some HAs that had assets in rapidly appreciating real estate markets found themselves with portfolios worth billions of euros (ibid.). Despite losing their direct funding from the central government, HAs remained powerful players in Amsterdam and Dutch housing regime and shaped much of the country’s urban development (ibid.).

The hybrid status of HAs did not bode well with the private sector, as HAs had essentially been handed over massive portfolios and rent from 32% of the Dutch population with essentially no start-up costs but could also compete with private developers for development opportunities (Van Duijne & Ronald, 2018; Priemus & Gruis, 2011). Furthermore, the network of HAs in the Netherlands built themselves resources that included access to loans with lower interest rates and

subsidies for smaller HAs, along with access to public lands for below market values, and an ability to borrow from the Dutch Municipality Bank (BNG) (Priemus & Gruis, 2011). As a result in 2009 the European Commission ruled that HAs had to allocate a minimum of 90% of their new housing construction to households with incomes of less than EUR 33,000 (ibid.). While social housing in the Netherlands was once the norm for all sectors of the population (Aalbers et. al., 2017), these new regulations for HAs excluded middle-income groups from accessing new social housing (Boelhouwer & Priemus, 2014).

In 2014, further controversy emerged as Vestia, at the time the largest Dutch housing association, became the centre of a parliamentary investigation (Aalbers et. al., 2017). The organization’s leadership made a failed bet on derivatives, ultimately leading to more than EUR 3 billion in losses (ibid.). The investigation put in the national spotlight not only the rapid growth of HAs and the fact that there was very little oversight on how HAs were run; it was also found that Vestia had refused to comply with regulators and sought support from foreign banks as local institutions turned away (ibid.). This event provided clear evidence of how financialization reshapes housing regimes. It also ended a period of rapid growth of HAs, who instead began to focus more on their core mandates of providing affordable housing (Nieboer & Gruis, 2016).

The Netherlands is now one of the worlds most financialized housing markets: homeowners in the Netherlands are now the most leveraged in world, its mortgage market has become highly securitized and liberal mortgage terms (Aalbers et. al., 2017; Lennartz et. al., 2018). Central government initiatives to raise homeownership rates succeeded as by 2018 this had reached 60% nationally (Van Duijne & Ronald, 2018). In 2015, Amsterdam’s homeownership rate had also risen substantially, to 30% from 11% in 1995, while 14% of the city’s social housing stock was

set to be privatized (Van Duijne & Ronald, 2018; Kadi & Musterd, 2015). Expectedly, there was strong housing price growth nationally from the 1980s until the GFC in 2008 (Lennartz et. al., 2018). The GFC then brought about considerable changes to Amsterdam’s housing regime. The crisis meant that market housing activity came to a standstill in the Netherlands (Boelhouwer & Priemus, 2014). In these following years of inactivity by the private sector, housing associations built 60% of housing in the Netherlands, up from 30% in the years prior (ibid.). This was

accompanied with a tightening of mortgage lending criteria (Van Duijne & Ronald, 2018).

Market rents in Amsterdam have increased rapidly since the 1990s, due to greater barriers to both homeownership and social housing (ibid.) as well a general recovery in Amsterdam’s property market (Savini, 2017). The city’s population has also been growing, at around 11,000 new residents per year (Gemeente Amsterdam, 2017). The growing disparity between market and social rents show evidence of a dualization of Amsterdam’s rental market (Van Duijne & Ronald, 2018). Furthermore, housing prices in Amsterdam have increased by 55% in 2018 from when they bottomed out in 2013 (Lennartz et. al., 2017). In order to address the rapidly

diminishing affordability of market housing, the municipal government introduced a new measure that requires all new housing development to include 40% affordable housing, 40% ‘middle income’ housing, and 20% market rate housing (Gemeente Amsterdam, 2017).

Pathways of Toronto’s Housing Regime Pre-modern period (pre-1930s)

In the late twentieth century, Canada’s per capita wealth lagged, and its welfare system was undeveloped in comparison to European countries, Australia and the United States (Esping-Andersen, 1990a). An economic boom that began in early 1900s was accompanied by an acute

housing shortage and skyrocketing costs for shelter, leading to poor living conditions in big cities like Toronto and Montreal (Bacher, 1985). Some housing was built by workers unions, similar to the system of housing associations that developed in the Netherlands at this time, but this was relatively limited in scope (ibid.). Informal housing began to appear on the urban fringes of Toronto as the working class escaped unsanitary conditions through self-building measures (ibid.). Civic unrest and public health concerns began to put pressure on local governments and businessowners, in 1911 Toronto began work on the first social housing project in Canada, which also spurred the country’s first foray into land use planning (ibid.). Faced with a country-wide housing crisis, the federal government introduced its first Federal Housing Scheme in 1919, which provided subsidies and low-cost loans for home ownership and self-build programs in accordance with new building codes set by local governments. This was followed in 1921 by the establishment of a government-funded mortgage fund managed by the National Housing Board (ibid.).

Fordist period (1940s – 1960s)

The Fordist period saw federal and provincial governments work further establish mortgage and insurance sectors. This was done through subsidies, legislation and regulatory framework

beginning with the founding of the Canada Mortgage and Housing Corporation (CMHC) in 1946 (Hulchanski, 2007a). Unlike its predecessor, the CMHC offered loans and subsidies to

institutional and commercial entities, rather than only individuals; this spurred the development of a private rental market in Canada. The Mortgage Insurance Fund was founded to spur the development of the private sector mortgage market (ibid.). Between 1940 and 1970, Canada built a higher proportion of rental housing per capita than North-western Europe and the United States; 42% of all new housing built in this period was private rental housing (Suttor, 2009).

During this period in Toronto, close to 50% of all households were renters, and up to 25% of households lived in post-war, high-rise rental apartments (ibid.)

This era was characterized by rapid urban growth as Canada caught up with the United States and Western Europe in urbanization rates, as well as the world’s highest post-war immigration rates and post-war economic growth (Suttor, 2014; Castles, 1998). During the Fordist period, Canada had relatively lower levels of homeownership and higher demand for rental housing compared to other liberal housing regimes, like Australia or the United States (Suttor, 2009). As an arms-length public organization, the CMHC had a critical role in the shaping of Toronto’s housing regime. It acted both as a financial institution as well as the country’s “housing

department developing policy and administrator of assistance programs” (Fallis, 1990, p. 888). During this period Canada also began to move away from the US welfare model, with the introduction of universal health care, subsidized post-secondary education, low-income subsidies, and federal commitments to funding provincial welfare programmes (Suttor, 2009; O’connor, 1989).

Neoliberal period (1970s – 1990s)

While the 1970s began a period of retreat of governments in Europe from social housing, in Canada it marked the beginning of social housing production began in a substantial form. Between the late 1960s and the mid 1970s over 200,000 social housing units were built countrywide (Hulchanski, 2007a). From 1965 to 1995 de-commodified housing accounted for 10% of total housing units built in Canada (Suttor, 2014). This period transformed much of Toronto’s low-income areas and inner suburbs, which became the site of modernist apartment blocks built with garden city planning ideals (August, 2008). These projects faced mounting

criticism from the public and activists like Jane Jacobs who had recently moved to Toronto (White, 2011). This coincided with the election of a progressive municipal government, who successfully advocated for the federal government to shift from social housing projects aimed at exclusively at low-income people in the 1960s towards more “innovative” co-op and mixed-income housing projects in the 1970s (Suttor, 2016; August, 2008). The result of these events were the highly successful mixed-income and co-operative projects like the St. Lawrence neighbourhood, spurring urban planners to adopt social mix ideals at a wider scale (August, 2008).

Following a familiar pattern in Toronto’s housing regime pathway, neoliberal policies were delayed in coming to Canada. Social spending increased substantially in the 1980s, reaching similar levels to social-democratic welfare regimes (Suttor, 2016). Meanwhile, this period also saw a number of homeownership assistance programmes be introduced, which for the following decades helped maintain homeownership rates at around 60% of Canadians (Hulchanski, 2007a). By the 1990s however the global trends of slowing investment in social housing appeared in Canada, following a major economic slowdown in the early part of the decade (Suttor, 2011). This slowdown also came with considerable reductions in market housing prices (ibid.). Federal governments began to download responsibilities for social housing and other welfare measures to provincial governments, and slowly began to reduce funding for these programs (ibid.).

Nationally, social housing only accounted for 2-3% of new housing construction in the late 1990s (Suttor, 2016). With provinces now in charge of housing programs, there began a diversion within the Canadian housing context. A conservative government in the province of Ontario (where Toronto is located) in the late 1990s further downloaded the responsibility for

social housing to municipal governments, and began a period of intergovernmental conflict (Suttor, 2016). Quite rapidly, Toronto went from being the national leader in social housing development to being a laggard, as other provinces continued to fund social housing projects (ibid.).

Late neoliberal period (2000s – present)

The late neoliberal period has been characterized by a rapidly growing population and extended construction boom of market housing. Toronto sits at the centre of the Greater Golden Horseshoe Region (GGH), North America’s fastest growing region, accounting for more than 25% of Canada’s GDP and attracting over 157,000 immigrants annually (Ontario Ministry of Municipal Affairs and Housing, 2017; Petramala & Clayton, 2019). In an effort to control the region’s expansion, smart regional growth policies were introduced by a liberal provincial government in the early 2000s aimed at curbing sprawl and densifying existing communities. This has led to a regional density comparable to Northern European cities (Hess & Sorensen, 2015), but more importantly has contributed to the ‘condo-ism’ that is now definitive of the Toronto housing regime (Rosen & Walks, 2015). Condominiums have grown to represent 18% of all housing in Toronto in 2011 from 2% in 1981, a figure set to further jump after construction hit a record high of 71,379 in Q1 2019 (Rosen & Walks, 2015; Urbanation, 2019). Average prices for

condominium units jumped 11.2% from 2017 to 2018 (BILD, 2019). Meanwhile the construction of market rental housing has been largely non-existent until during this same period (Rosen & Walks, 2015).

A highly liberalized housing regime has contributed to rapidly escalating housing costs; gentrification of the central city and transit-accessible outer regions is leading to increasing

economic segregation and income polarization (Skaburskis, 2012; Hulchanski, 2007b). 91% of people in Toronto live in market housing, slightly less than the national figure of 95%

(Hulchanski, 2007a; City of Toronto, 2017), showing that the de-commodified sector is highly residualized. 46% of households in the city rent, a value that has remained relatively stable since the post-war era (City of Toronto, 2017), compared to 37% nationally (Hulchanski, 2007a). However, with most new housing supply being condominium units, there has been a boom in private landlordism, similar to that described in Britain by Ronald & Kadi (2018); over 40% of Toronto condominiums are not owner occupied (Lindeman, 2019).

Various governments have introduced a range of housing affordability measures in the late neoliberal period, but due to Canada’s plurality-based constitution, these are highly subject to regime change. Bryant (2004) found in his investigation into Ontario housing policy that while government policy had been informed by “diverse knowledge inputs”, political ideology was the deciding factor (p. 648). The study illustrated how the conservative unilaterally applied

neoliberal policies, reversing previous regulation of the housing market, only to lose power to a left-wing party reinstated universal rent control and introduced a Foreign Buyers Tax; since then, a right-wing party has returned to power and once again done away with universal rent control. The federal government has introduced a range of measures, chiefly tightening mortgage lending criteria and increasing interest rates in 2018 (Verma & Beaupre, 2018). As part of the federal governments wider National Housing Strategy, the CMHC has also recently introduced a CAD 14 billion loan program for rental housing, and a CAD 13 billion affordable housing fund, which is leading to a surge in rental housing development (Wong, 2019). Counterintuitively, it has introduced incentives for first-time buyers which will have the likely impact of raising housing prices (Rubin, 2019). The municipal government is introducing inclusionary zoning, although

this requires support from the new provincial government (Mathieu, 2019). It is important to note that real estate and associated industries (not including construction) make up the largest

industrial sector in Canada (Statistics Canada, 2019a) and thus hold a particularly powerful lobby.

Comparison of Regimes

Amsterdam Toronto

Pre-modern period

Pre-1930s critical junctures - support of housing associations - AWFC formation - national government

involvement

political focal points

- housing shortages - economic growth

social mechanisms

- poor living conditions - wartime measures critical junctures - workers unions constructing housing - federal government intervention

political focal points

- housing shortages - economic growth

social mechanisms

- civic unrest

- poor living conditions

Fordist period

1940s – 1960s critical junctures - devolution of

responsibility to HAs - mass production of social

housing

political focal points

- non-partisan housing and welfare support

social mechanisms

- wartime recovery

critical junctures

- financialization

political focal points

- development of federal housing strategies - establishment of CMHC

and other agencies

social mechanisms

- post-war growth

Neoliberal period

1970s – 1990s critical junctures - financialization - delayed onset of

neoliberal policies - financial slowdown

political focal points

- austerity pressures - housing market

critical junctures

- large-scale investment in social housing

- deviation from other liberal welfare states

political focal points

- investments in welfare state - left-wing governments

social mechanisms

- slowed growth

social mechanisms

- civic organization

Late neoliberal period

2000s - present critical junctures - homeownership policies - 40/40/20 rule

political focal points

- Vestia controversy - EC competition ruling

social mechanisms

- public support for homeownership

- decreasing affordability

critical junctures

- smart growth policy - supply measures

political focal points

- regime changes social mechanisms - high immigration - decreasing affordability Figure 4. CPT analysis. Source: Author. Financialization

While the financialization of Toronto’s housing regime occurred much earlier, Amsterdam’s financialization could be described as more intensive. Canada’s owner-occupation rate has remained stable at around 60% since the 1970s, while the Netherlands’ has jumped up to 60% from 45% in 15 years (Hulchanski, 2007; Van Duijne & Ronald, 2018). The Netherlands has looser lending criteria in comparison to Canada, and a higher mortgage-to-GDP rate (see figure 5). Both the Netherlands and Canada underwent neoliberal restructuring later in comparison to most of the rich world.

Amsterdam Toronto

Median income (EUR) _{24,500 22,670} Mortgage-to-GDP ratio _{106% 76%} Housing tenure split _{44% social;}

26% market rental; 30% owner occupied

9% social;

46% market rental; 45% owner occupied Real estate associated property taxes (2.5%); property tax (33%);

Figure 5. Summary of housing regime outcomes.

Sources: CBS (2019); City of Toronto (2016); City of Toronto (2017); Gemeente Amsterdam (2017); Gemeente

Amsterdam (2018); Statistics Canada (2018); Van Duijne & Ronald (2018)

Decommodification measures

Amsterdam clearly has a much higher social housing stock than Toronto, with 44% versus 9% (see figure 5), providing a much greater degree of decommodified housing. There are key differences however in how this social housing stock is provided – the rental structure of Toronto’s social housing is much more progressive. 73% of social housing in Toronto are rent-geared-to-income (RGI) units, where floats rents at 30% of household income (City of Toronto, 2017). This is considerably different from social housing rents in Amsterdam, where rents are pinned to certain ‘affordable’ levels, rather than adjusted for tenants’ incomes. After 2014, the income cut-off for access to new social housing units was EUR 33,000 (Priemus & Gruis, 2011). There still remains a lack of clarity on roll-out of the 40-40-20 rule and the provision of middle-income housing, who presently face the most challenges in Amsterdam’s housing market.

Entrenchment

Toronto’s revenue sources are noticeably more embedded in rising property values, with more than 38% of its budget coming from real estate related sources, in comparison to Amsterdam’s 7%. However, this proportion is rising in Amsterdam (Gemeente Amsterdam, 2019) and the land lease system has proven ever more essential for the municipality to recoup costs in its

development plans (Savini, 2017). Furthermore, with the municipality owning almost all of the land in Amsterdam (ibid.) there is a clear vested interest to continue the pursuit of investments that increase land value.

Concluding remarks

This study has shown the use of examining pathways to understand the outcomes of housing regimes. It allows one to see the commonalities and contrasts between housing regimes and how each has evolved. Amsterdam and Toronto remain very different in the housing opportunities they offer and the trajectories they are moving towards; Amsterdam seems to simultaneously moving towards a dualist system while building up its national and municipal policy frameworks to ensure the provision of new affordable housing; Toronto remains steadfast with market based measures, in hopes an increase in supply will alleviate housing affordability issues. The analysis has also shown the potential transferability of housing approaches given the correct social, political and economic contexts to support them. s

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