The housing crisis in paradox

Interview by Raquel Luna –

“D’Logementskris am Paradox. Wëll Lëtzebuerg eng Zwee-Klasse-Gesellschaft?” (The housing crisis in paradox: does Luxembourg want a two-class society?) published in FGFC Mag’¹ by Dr. Phil Nora Schleich describes the housing crisis problem and the dynamics at play. For an increasing amount of people, owning a home (and even renting one) has become a serious challenge, if not impossible. In January 2022, the survey of public opinion from Eurobarometer showed that housing is the number one concern of the population in Luxembourg.²

1. In your article “The housing crisis in paradox” you mention the elephant in the room, namely speculation. Can you please describe it?

Well, the housing crisis is a problem that is known by nearly everybody living in and outside of Luxembourg, but only a few people were really talking about what could cause this crisis. The article from 2021 mentioned that there have been members of the government saying back then that the housing crisis and speculation are non-topic in Luxembourg. The speculative incentives for landowners to not sell the land (to give more space for housing) are big. When you see how incredibly insanely the land prices have risen in the past years, it is in fact clear that people who own land don’t want to sell because they speculate to have more money in 3, 4, 10, 20 years, due to the inflation of the prices.

In Luxembourg, 72% of construction land is in private hands. Those private hands represent 0.1% of the population. It’s an incredible paradox that most of the construction land is in the hands of only 0.1% of the people. Very few people profit from the speculation and they appear to be very powerful in retaining their lands that nobody, not even the state seems able to do something about it. It is highly probable that many of this 0.1% is working in governmental or well paid-jobs or they vote for the people in politics that are willing to just not touch on these topics. Speculation has in this area no adversaries, except maybe the ”small people” who try to show that this is not working anymore, that they are bleeding in order to afford housing. People working in Luxembourg but not living here have no voting power in Luxembourg and they do not profit from the speculation of land.

2. What is this two-class society that is being created by the housing crisis?

On one hand, you have the people who work and pay taxes here, but they struggle to even rent a home within Luxembourg. It includes: foreigners that live in their country and come every day to work³; most of the young people and foreigners who are not in high positions or don’t come from wealthy families; people, Luxembourgish and foreigners, who now decide to live outside of Luxembourg. On the other hand, you have people with very high-paid positions (for example, in wealthy companies that Luxembourg is proud of having here) and people with a wealthy family or heritage.

The banks are also catalyzing the dynamics of this two-class system. They give loans mainly to people who have a considerable security backup (guarantee), which is normally someone with a stable high paid job and/or inheritance or wealthy parents behind. The loan still means a commitment to a huge amount of debt for 20-30 years. People who don’t meet the criteria do not easily get a home loan. Banks foster high home prices because they create people who can afford them. At the same time, they hinder people who do not have enough wealth.

3. Are the dynamics of speculation, investment protection, slow bureaucracy, the housing issue as non-topical, a Realpolitik that worsens the situation, etc. still at play one year after? Has anything changed?

It has changed so far as it gets more and more conscious. People who are bleeding every month to pay, are absolutely conscious of the problem. The societal class that is not directly touched (among others, the politicians) gets more conscious because people affected start to show their fears, start to demonstrate, and start to discuss more.

Awareness of the housing crisis grew during the pandemic when people in Luxembourg were scared France would close their borders. Finally, the borders never closed, but what if France would have shut the borders down? That would have been a tragedy. Two-thirds of the health care workers are cross-border workers. We rely on people working from across the border.

There is a shift in politics: they acknowledge that they have to address the housing crisis. The question is if politicians stress the topic in order to fulfill their function or if they are really concerned about how the current dynamics work and where it will take society. Changing the laws, that is changing the incentives for speculators, might mean for politicians to harm themselves as private persons. Taking the housing crisis seriously means fundamental changes and accepting that the profit of speculators will diminish.

Some programs are there to help (for example construction projects), but the level of yearly construction (in the hundreds) is far away from the current needs (in the thousands). It is crazy. We should all ask ourselves here and now, honestly, do we continue putting a band-aid on the problem with financing here and there a bit, or do we dare to go to the real root knowing it will harm our personal interests. And that’s something that should be discussed.

4. In your article, you talk about three particular attitudes that are behind the current housing crisis: one, a vision of property ownership as simply an investment and not as serving a practical purpose (such as people actually living there); two, the satisfaction of own interests over the general societal needs; and three, the permanent need for high economic growth to maintain the high living standards which in small print demands that more people come to work in Luxembourg. What can be done about those attitudes?

Now it gets philosophical. I think it traces back to the image we all learned in our childhood about what a good life, a successful life, looks like. We get the impression from early years that owning, having, creating value, and making something out of ourselves, like having a house, having two cars, having 3.5 children and two dogs, is our aim. Everybody wants to be master of his own domain. After the world wars where hardly anyone had anything anymore, this tendency was comprehensible. This impression of reassuring personal security was good. Now, such values as the basis of how our society functions are a big problem due to the limited resources. It is not possible that everybody has and owns more and more limitless.

We live in a hyper-capitalist society where consumption creates more “needs” and creates more things that can fulfill these needs… again and again. We are living in this vicious circle. The societal forms propagated by capitalism hinder us from our personal lives. We keep relying on the dogma of infinite growth (to foster consumption and production) and it sets our societal standard. It is a paradigm. Even if life would not fall into pieces, we stick to that idea. If we keep sticking to that idea we will never accept or never learn that is ok to consider also other lifestyles. It is a “Hamsterrad”, a hamster wheel, which keeps us trapped from having some distance from our current lifestyles to ask ourselves, what is it, in fact, that we really need?

I think we can say our biological needs do not look like that. Our spiritual or mental fulfillment essentially does not rely on consumption or gathering goods. It is not infinite growth that is needed to have a fulfilled, decent life. We have all these capitalist needs we are taught to accept. But it is not what we need. Being free to buy 20 pairs of new shoes every year is not this. We were taught by liberalism and socialism that being able or being allowed to do whatever we want is freedom. Such freedom, such “Wohlstand”, is a chimera. There is fortune, “Wohlstand”, in other things than consumption.

What human beings need as a zoon politikon, according to Aristotle, is being together, living together, and being free enough to live our own dreams as to live to our own potential. Real freedom means, in fact, to be independent of such needs that are not our biological ones. Of course, we have needs we need to rely on, like food, shelter, and security. But Freedom is not about the fulfillment of external consumption. Freedom, according to Aristotle means being independent of other than our biological needs and not relying on external value. These needs are also fulfilled in a society that does not depend on endless growth.

So, what can we do about the attitudes mentioned above? Ask again, what do we really need and not what does capitalism needs to sustain itself. It is not only the individual who can act. There is a need for politics to just draw the big lines. We need them.

5. Can we analyze the housing crisis in Luxembourg as a conflict for “resources” and in what ways?

What is housing? Housing is a basic need for a person to develop his life. It is impossible to live without housing. In other regions, they are struggling for water, and land to grow food. Here we have enough money to pay for all this, but we are struggling for enough space, land, to just live. So, yes, I would say it’s a big conflict for resources. And it’s a bit tragic because here we see that even though salaries are very high, we don’t manage to afford anymore for housing. We begin to learn that we cannot simply pay for everything and fix it.

6. What are your thoughts on simultaneously addressing the housing crisis (increasing need for land for the construction of homes), the environmental crisis⁴ (increasing loss of land, ecosystems, and biodiversity), and the food crises (rising food prices and calls for more land for local agriculture)?

That’s a tricky one. Here I want to go back to ancient Greece, and their notion of freedom in the sense of self-sufficiency. To live in what they called autarky. It means society does not need to rely on anyone else as it can provide for itself. For me, the only choice enabling a future is incorporating all the needs of all parties as communities that are living together in a way to work the land, respect the land, and live with the land. That is, respecting both the land and the personal needs. It means growing, taking care of natural processes, and directing the lifestyle to the aim of being in accordance with the living world surrounding them. By living world, I do not mean the great cities with money and buildings, but I mean the soil, the air, the water, the plants, and animals… because we are biological beings. We stem from nature and belong to nature. Living in nature with nature for nature is the same as living our lives with us, with our other companions, for them, for us, for our future together. I don’t see how otherwise it would be practicable in the future.

We have alienated ourselves from where we come from, where we belong. People get sick as we are taken out of our bodies and minds; we are taken out of our actual place in nature. It’s not an illusion that when you go to the forest for a long walk and you take deep breaths, you feel much better. It’s not an illusion the increasing number of young patients at the psychiatrist who are unable to cope with the current lifestyle. It’s not an illusion that the current crises bring light to how many people don’t find orientation anymore in this society and lifestyle. There is a big feeling of losing connection to life, to society. A sense of being lost.

I am not antiprogress, but anti- a lifestyle that is not corresponding to our natural needs. We need technology, yes, but technological progress that helps to maintain the nature where we live and not for making it worse and worse.

read the translation in French

Footnotes:

1. “D’Logementskris am Paradox. Wëll Lëtzebuerg eng Zwee-Klasse-Gesellschaft?”, in: FGFC Mag’, Numéro 18, Automne 2021, pp. 36-41.
2. L’opinion publique dans l’Union européenne : rapport national Luxembourg, Eurobaromètre Standard 96 travail de terrain : janvier–février 2022. https://download.rtl.lu/2022/04/11/d7a3d727bafd772b949151add62a157e.pdf
3. Selon une étude du Statec publiée en novembre 2020, les travailleurs transfrontaliers représentaient 45,5% de l’emploi salarié national, tandis que les ressortissants luxembourgeois représentaient 26,7% et les résidents étrangers (non-nationaux) 27,8%. https://today.rtl.lu/news/luxembourg/a/1618904.html
4. « Seuls 13,4 % des arbres au Luxembourg étaient en bonne santé en 2019, selon le Statec. Les autres sont légèrement ou gravement endommagés. » de Quand un arbre tombe dans la forêt, Misch Pautsch. Publié dans Letzebuerger Journal le 7 jan. 2021 : https://journal.lu/fr/quand-un-arbre-tombe-dans-la-foret