I remember a conversation with some international colleagues on a terrace during the Venice Biennale. When I mentioned that my research was about the housing crisis in Luxembourg, they were surprised. A scholar from the UK asked: “Luxembourg has a housing crisis?” I said, “Yes, of course,” and explained that it was quite a severe one. This was the beginning of a long night of arguing about who had the most pertinent housing crisis. Everyone claimed it was worse in the place where they live: Amsterdam, Marseille, Dublin, New York, Lorentzweiler, you name it.
In support of their cases, they cited experiences such as a daily two-hour commute, spending 60% of their income on housing and difficulties finding good architects for their offices because of the high cost of living in their city.
I was only in my first year of doctoral studies. At that time, my research was focused on statistics and data to get an overview of the national housing crisis. Sitting on that terrace, I realised two important facts that would eventually guide my research: first, housing crises affect everyone. It’s not just those who can’t find affordable housing, or those who are struggling to pay their rent or loans. The lack of affordable housing diminishes the attractiveness of a country or a city and thus affects its economic potential. Housing is an infrastructure without which our society cannot operate. Second, if housing crises are a global phenomenon, as the heated discussion led me to suspect, then they must be the result of common mechanisms operating beyond the borders of the Grand Duchy. I was curious. I shifted the focus of my research from quantitative, context-specific indicators to exploring the foundations and origins of the current housing market conditions and the resulting housing crises. There was one recurring concept that I later understood to be the fundamental trigger of the status quo: The commodification of housing.
The fuel for housing crises
The term “commodification” describes a process in which a thing that was not originally defined as such is subsequently assigned the characteristics of a commodity. Commodities are traded on a market. Their price is therefore determined by market forces and logic (such as supply and demand). In Luxembourg, the divergence between supply and demand is further exacerbated by the scarcity of land (the essential resource for housing) on the one hand, and the ever-increasing and dual demand on the other. The latter consists of future residents, who demand housing for its inherent purpose as a home, and financially motivated actors, who misuse housing as an abstract good to generate a maximum of profit. This speculative demand, which puts additional pressure on the equation, causing housing prices to rise further, stems from commodification itself. There would be no incentive for purely speculative demand if housing could not be traded as a profitable commodity.
Understanding commodification of housing sets the direction of my dissertation. Prior to that moment, I had simply accepted the ever-increasing housing prices, the vacant houses and lots, and the purpose of real estate as a productive object for speculation, wealth accumulation and asset protection as a permanent reality. It was only when I examined the housing crisis through the lens of commodification that I realised that these developments resulted from it and should thereby not be perceived as unalterable facts. In exploring the concept of commodification, I also understood that the definition of housing as a commodity is not immanent to housing, but has been constructed in a social process. Since my main research interest was to find a solution to the housing crisis in Luxembourg, I was presented with an intriguing perspective: something that is constructed can be deconstructed. If the commodification of housing was the cause of this crisis, then decommodification could be its remedy.
A shelter for decommodified housing
The housing stock in Luxembourg is currently divided into two sectors: the private housing sector (market) and the public housing sector (state). After exploring the concept of decommodification, I realised that the creation of housing that can function permanently as decommodified would require a third sector that protects its housing from the paradigms of commodification that (more or less) prevail in the two existing sectors. The private housing sector is driven by profit-maximising incentives and is increasingly controlled and shaped by a privileged few who have no relation to the use value of housing (globalisation, monopolisation and financialisation of real estate markets). Decommodification cannot take place here because the housing that is part of this sector is actively or inactively governed by the mechanisms and logic of the free market. On the other hand, the decommodified character of public housing is also fragile and sometimes short-lived. As the privatisation of public housing at the end of the 20th century showed, it is highly dependent on the zeitgeist and the political agenda. Therefore, sustainable decommodification cannot take place in the public housing sector. It requires a protected sphere, an additional autonomous sector that follows its own logic and paradigms, which I propose to call the third housing sector. This sector should be understood as a complementary sector that is decoupled from the mechanisms of the two existing sectors and can operate independently.
Housing cooperatives are the most suitable prototype for the establishment of a third housing sector in Luxembourg.
A forgotten housing model
After analysing different housing models in my dissertation, I argue that housing cooperatives are the most suitable prototype for the establishment of a third housing sector in Luxembourg. The idea of housing cooperatives emerged at the end of the 19th century. Since then, several European countries have cultivated a tradition of this model. In Luxembourg, the first housing cooperative was founded in 1920 and closed two years later. After that, the housing model was forgotten in the country until Adhoc gave it another try in 2016.
Housing cooperatives are ownership models in which the residents of the housing units are members of the cooperative, while the cooperative itself – as a company – owns the real estate. Housing cooperatives differ widely in size, architecture, governance and statutes, and thus in their impact on the affordable housing stock and the durability of the decommodification character of their property. If well regulated, cooperatives can be highly sustainable (environmentally, economically and socially) and have a great agency in alleviating a housing crisis. To stimulate the realisation of housing cooperatives in Luxembourg, I propose a public funding (subsidies and/or affordable land leases) of cooperatives, varying according to the expansion potential of the cooperative, the protection of its real estate from a transfer to the private market, and the percentage of low-income residents.
As members, residents have a right to participate in decisions concerning the management, design and governance of the cooperative. However, they are not the owners of their individual apartments and therefore have no authority to rent or sell them on the open market. Any decision regarding the disposition of the property must go through the cooperative’s horizontal hierarchy, with the participation of all members (and – as I propose in my dissertation – the participation of the ministry of housing through a veto right). This mechanism significantly reduces the risk of privatisation of the cooperative’s real estate and thus provides a substantial protection against commodification.
Culture of ownership
While the alternative ownership model is the crucial factor that makes housing cooperatives so sustainable and underpins their significant agency in creating affordable housing, it is also the aspect that I consider to be the most difficult to communicate in Luxembourg. In the Grand Duchy, private home ownership is considered the ultimate. This mentality prevails not only in private households, but also in politics: since the first housing policies at the beginning of the 20th century, Luxembourg has cultivated a political tradition of ownership, in which access to property for a broader section of the population is understood as a productive tool for alleviating housing crises.
Through the exploration of contemporary housing crises at the systemic scale, I identified a contradiction that I called the “ownership paradox” in my dissertation. In addition to wealth accumulation and other benefits, homeownership provides housing security: by occupying their own property, households are protected from the (sometimes unpredictable) conditions of the open market (rising rents, lease terminations…). However, these market uncertainties are direct consequences of commodification, while commodification itself can only happen because – and as long as – housing can be owned. This is the paradox of ownership: homeownership offers protection from a market that was created in the first place by its very appearance and existence.
This paradox formulates the fundamental argument for questioning political measures to promote and subsidise homeownership. Privately owned property is always part of the free market (even if inactive during the period of self-occupation) and thus follows the principles of commodification. Conversely, this means that any policy that facilitates access to absolute private ownership (land and building owned by a private individual or entity) will, in the long run, further the commodification of housing and thus, symptomatically, exacerbate the housing crisis.
A straightforward call
If we want to solve this crisis, we must understand its origins, identify and acknowledge its triggers, and counteract them. Given the opportunity of a carte blanche in a magazine with such a large and interdisciplinary readership, I cannot resist using it as a straightforward call for the following actions: first, we need a shift in housing policy, which should no longer rely on short-term palliatives, but on sustainable solutions, by analysing and considering the long-term effects of the measures taken. Second, we need to reconceptualise the model of home ownership, through an honest debate at the personal level, and a systemic one at the political level. Third, we need to develop concrete alternatives to purely market or purely state housing provision that allow housing to be shaped by its inhabitants, to remain permanently decoupled from the logic of the profit-oriented market and to fulfil its only truly inherent function as a home.
Biography
Céline Zimmer is an architect and researcher based in Luxembourg. In December 2023, she successfully defended her doctoral dissertation “Ein Dritter Wohnungssektor für Luxemburg – Emanzipation von Markt und Staat in der Wohnversorgung” at the University of Luxembourg. Together with Florian Hertweck, she founded -Y, a studio for architecture, urbanism and territorial design.
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