Horvat, M. (2024). Improving housing affordability through housing allowances: A pilot project in Croatia. In: Madrazo, L. (Ed.). Proceedings of the RE-DWELL Conference 2024 - Sustainable Living, Affordable Homes: Meeting the Challenge Together (pp. 103-109). Ramon Llull University, Barcelona, Spain.

Housing affordability is one of the most pressing social problems in most EU Member States. Cities, especially capital cities, are experiencing a significant influx of inhabitants, leading to an increase in housing costs. This gradual densification process combined with slow housing construction is exacerbating affordability inequality for average earners, with the gap widening for those on below average incomes, leaving more European households unable to afford adequate housing. The inability of younger generations and the precariously employed to buy their own home is forcing them into the rental market, earning them the label "Generation Rent". The phenomena of financialisation and privatisation, particularly in CEE countries, have contributed to the high proportion of homeowners in societies. This worsens housing affordability since many housing units are converted into short-term rental properties, limiting long-term rental options and driving up rental prices. In urban centres, especially in capital cities, there is often a shortage of affordable housing options such as public or rental housing. In this paper we will look at housing allowances, a special type of demand-side intervention that has characteristics of both a housing subsidy and an income subsidy. We will evaluate a Croatian pilot project in which housing allowances are distributed as a measure to increase housing affordability. Finally, we will recommend policy measures that should be considered for a greater impact of the housing allowances in Croatia.