Europe tackles the housing crisis

The statistics are staggering: nearly 1,3 million people live without shelter in the EU, twice the population of Luxembourg.

Over the past 15 years, housing prices have increased by 60%. Rental prices have risen by nearly 30%, according to the European statistical institute.

"For far too many Europeans today, finding a home has become a source of anxiety," said European Commission President Ursula von der Leyen.

In an attempt to stem this crisis, which is affecting all 27 countries of the European Union, its teams have developed a "plan for affordable housing", which will be presented Tuesday afternoon.

“Infatuation”

Why did you wait so long to act on this matter?

Housing is not, in principle, part of the European Union's competences like agriculture, immigration or trade: it is up to the Member States to act directly.

But the left is pushing for Europe to take up the problem nonetheless.

"We have been advocating for this cause for years, but we have struggled to put it at the heart of European politics," says Socialist MEP Irene Tinagli.

According to the Italian politician, this crisis "is widespread across the continent" and far from affecting only the city centers of European metropolises.

As head of the European Parliament's Housing Committee, she also claims to have met with a whole host of European mayors demanding that the Commission take the matter in hand.

Faced with these repeated requests, Brussels therefore devised the very first European housing strategy.

"We ourselves were surprised by the enthusiasm surrounding this issue," confided a source within the Commission.

Regulating short-term rentals

According to a draft of the plan seen by AFP, the European executive plans to introduce legislation to regulate short-term rentals, such as Airbnb, particularly in major tourist cities, where many residents accuse them of contributing to soaring rents.

The crisis is particularly pronounced in Spain, a country which welcomed a record number of visitors in 2024.

This proposed law could, among other things, include a cap on the number of nights allowed.

Brussels also wants to boost the construction sector.

"The idea is not to propose a text requiring each member state to build so many houses costing a maximum of so many euros," explains this source within the European executive.

But rather to counter labor shortages through a large apprenticeship training program and to modify certain environmental standards in order to accelerate the issuance of building permits.

The Commission estimates that the continent will need more than two million homes per year to meet current demand.

It also aims to facilitate investments by member states in this sector and to mobilize the private sector.

According to his calculations, up to 375 billion euros could be mobilized for this purpose by 2029.

A widespread housing crisis in Europe

The European Commission is presenting its first-ever affordable housing support plan on Tuesday in an attempt to mitigate the crisis in the sector, which constitutes "the most socially destabilizing challenge in the European Union" according to Thomas Kattnig, a member of the European Economic and Social Council (EESC).

This crisis "affects more or less all 27 member states, from southern Europe to the Baltic countries, from large cities to rural areas," adds the person who is co-rapporteur of several opinions on the subject at the CESE.

Price increase

Housing prices have jumped by more than 60% between 2010 and 2025, and rents by around 29%, a surge even more pronounced in some European countries. In Estonia, for example, purchase prices have skyrocketed by 250% since 2010 and rents by 218%.

The origin of the crisis can be traced back to the 2008-2009 financial crisis, which was followed by austerity measures from governments, according to Thomas Kattnig.

The crisis "worsened from 2015 onwards, driven by financialization, rising land prices and the cost of living crisis following the pandemic," he explains.

In their search for profitability, investors who have chosen housing have contributed to rising prices and to the disconnect from wage growth, adds Marie Hyland, a social policy researcher at the public agency Eurofund.

The rise of short-term tourist rentals, which are more profitable than year-round rentals, has also "resulted in a rise in prices" in tourist areas, explains the researcher.

The number of nights booked via the Airbnb, Booking, Expedia and Tripadvisor platforms reached 854 million in 2024, almost twice as many as in 2018.

Unaffordable housing

To talk about affordable housing, we must "also think about incomes," which have not kept pace with rising housing prices, Marie Hyland points out.

On average in 2024, Europeans spent 19% of their disposable income on their housing, but for households whose income is below 60% of the national median level, housing captures 37% of resources.

And in 2024, more than 16,5 million European households spent more than 40% of their income on their housing (the threshold known as the excessive strain rate), representing 8,2% of EU households.

The difficulties in accessing affordable housing particularly affect young people, who more often have "low wages", "precarious employment contracts", not necessarily "access to unemployment benefits" and who "seek housing in urban areas", the most strained, lists Marie Hyland.

Households with children are also more affected by the housing crisis, particularly single-parent families.

Among the consequences of high housing costs, 17% of the European population lived in overcrowded housing in 2024, a phenomenon particularly observed in Romania.

Nearly 1,3 million people are homeless in the EU. In Ireland, the number of people housed in emergency shelters quadrupled between 2014 and 2023.

Lack of construction

The European Commission believes the EU needs to build more than two million homes per year to meet current demand. However, only 1,6 million homes are built on average each year.

"We need to be able to build more homes for which an ordinary household with ordinary jobs can obtain a loan and repay it," says John Comer, also a member of the CESE and a housing specialist.

Since 2010, housing construction costs have jumped by 56%. They have soared by +172% in Hungary and by +43% in France.

This increase in costs and the slowdown in the number of homes built are affecting private homes as well as social landlords and developers of housing with rents adapted to the middle classes.

The middle classes "are also suffering in this crisis," according to Marie Hyland, who believes that "the supply of affordable housing for middle-income households should not be at the expense of the most vulnerable groups."

Illustrative image of the article via Depositphotos.com.