The European Parliament adopted its first-ever report on the Housing Crisis in the European Union.
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With 367 votes in favour and 166 against, the report calls for a joint EU action to tackle the housing crisis and lift citizens out of precarious living conditions. Recommendations include reducing red tape, scaling up the bloc’s construction and innovation sectors, and mobilizing greater investment and fiscal support.
With the 2008 global financial crisis, housing became a pan-European social emergency, worsening significantly after the 2020 pandemic. House prices rose by 60.5 percent from 2015, while rents increased by 28 percent. In 2025, the ownership rate for 24 to 35-year-olds was down by 6 percent since 2005, and one in ten people were unable to pay rent.
The lack of affordable housing also challenges the smooth functioning of the single market, undermining Europe’s economic growth and the long-vowed competitiveness.
The Commission’s Affordable Housing Plan is the EU’s effort to shift this narrative. By boosting house supply, mobilising investments, and helping citizens with immediate support mechanisms, the plan guides and supports member states’ action towards a more affordable housing.
House prices outpace income growth
To buy a home in the EU, Europeans must earn, on average, around as much as they currently do in most major cities. Price-to-income ratios often exceed 8–10 years of gross salary, climbing above 12–15 years in the least affordable capitals. To rent a home in any high-demand city, citizens must spend around 30 percent to 40 percent of their income, and a growing share of young renters already exceeds that threshold.
“In many countries’ salaries have not kept up with inflation. Then the real estate market pushed prices up to 60 percent in 10 years. This is not citizens’ fault. It’s a lack of public policy, attention, and monitoring”, MEP and president of the EP’s Special Committee on the Housing Crisis, Irene Tinagli, told Euronews.
The housing crisis is blatant: young people leave home later, social housing supply is insufficient, overcrowding persists in many regions, and homelessness is rising across the EU.
According to Eurostat, EU house prices rose by over 60 percent since 2015. Prices outpace income growth, while rents are more than 20 percent higher. The trend varies across countries. Prices surged higher in parts of eastern and southern Europe, such as Hungary, Portugal, and Lithuania, while countries like Finland had more moderate increases or even slight declines. Western and northern European cities remain among the most expensive overall.
The pattern is clear: a decade ago, owning a home was the norm, which was the case for around 70 percent of Europeans. Today, that figure has declined to about 68 percent, while rental rates have climbed to roughly 32 percent, the highest level in decades.
The reasons behind the crisis
Demand for housing keeps increasing steadily, driven by urbanisation, population growth in cities, migration within the EU, and a rise in smaller households. More people compete for housing in the same urban areas, while supply fails to keep pace.
Land prices, rising material and labour costs, strict zoning rules, and slow permitting processes make construction sluggish and insufficient. The European Investment Bank (EIB) says: there’s a shortfall of millions of homes, and construction levels are way below what is needed each year.
Financial and market dynamics is another reason. Between 2015 and 2022, an era of ultra-low interest rates fuelled a massive housing boom, driving EU house prices up by approximately 63.6 percent.
The landscape shifted from July 2022, when the ECB launched rate hikes that took the deposit facility rate from 0 percent to a peak of 4 percent by September 2023. These hikes made mortgages less affordable, nearly quadrupling average interest rates for new borrowers compared to 2021 levels. High mortgage rates make buying a home too expensive, so people are stuck renting for longer, increasing competition driving monthly rent prices even higher.
In some cities like Madrid and Barcelona, investment demand adds pressure. In 2024, foreign buyers accounted for 7 percent of home sales in Madrid and 14.3 percent in Barcelona. Institutional investors and large funds drove over 50 percent of the total real estate investment combined. Then there’s the short-term rental boom, which reduced the availability of long-term housing in high-tourism areas like those two cities.
Pressure reaches a critical point
More people decide to live together to share housing costs, leading to overcrowding. Nearly 48 percent of 18-to-34-year-olds currently live with roommates, though surveys show that over half would rather be alone. To avoid this, many delay leaving the family home.
The same limitations impact social housing, which no longer acts as a sufficient safety net. Supply has not kept pace with demand, resulting in long waiting lists and limited access for low- and middle-income households.
Many cities restrict eligibility to the most vulnerable, meaning that even working households priced out of the private market cannot access affordable alternatives. At the same time, much of the social housing stock is ageing and requires renovation, particularly to meet energy efficiency standards.
An estimated 1,28 percent in the EU currently live on the streets, in shelters, or temporary accommodation. It’s a 30 percent increase compared to 2019 levels, and a 70 percent rise over the last decade.
People are being priced out of the market, so the problem is no longer confined to the most vulnerable, increasingly affecting working individuals and families who cannot secure stable housing. Shortages in social housing and support services make it harder for people experiencing homelessness to find long-term solutions.
A multi-level cooperation
Housing remains primarily a national competence, meaning the EU’s actions can only complement national policies. Member states have the final say on rents, social-housing models, zoning rules, tenant protection, and property taxation.
According to Elizabeth Kuiper, Associate Director at the European Policy Centre in Brussels, Europe has overlooked the magnitude of the crises for the last twenty years, considering it only a national problem.
Kuiper warns that a multi-level cooperation with local authorities holding “a stronger role and flag solutions to EU politicians”, is fundamental. She also added that housing should not only be regarded as a “social justice issue, but as a pan-European economic issue”.
The EU can’t impose a common housing policy and regulate the housing market across the bloc. Yet it can indirectly influence housing through funding and soft-law tools, while providing guidance and supporting national action.
Borja Giménez Larraz, MEP and rapporteur of the report, recalled the importance of the subsidiarity principle. “This report recommends taking some actions at regional and local level […]. We are here to help to contribute to the solution, but the final solution will have to come from the member states”, he told Euronews.
More than €43 billion were mobilized for 2021-2027, topped up by an additional €10 billion for 2026-2027. In April 2024, the Commission calculated that €100 billion will boost energy efficiency renovation projects across the bloc by 2030.
Under the Recovery and Resilience Facility, €15.1 billion are allocated to social housing and part of the InvestEU’s €26.2 billion supports building renovations aimed at energy saving. A substantial share of Horizon Europe (€95.5 billion) is invested into safe, healthy, affordable and sustainable access to housing.
Part of the Just Transition Fund (€17.5 billion) is allocated to investments for energy efficiency to reduce energy poverty. The 2025 mid-term revision of the cohesion funds (€392 billion) doubled the amount for a more affordable and social housing.
While not increasing housing supply, the Energy Performance of Buildings Directive and the Energy Efficiency Directive help make housing more affordable. Both improve energy efficiency, reduce citizens’ energy bills and address energy poverty.
Europe’s problem-solving attempts
According to Kuiper, the fact the EU has no direct power on housing policies “doesn’t make it very easy to come up with a European solution”. Yet, Europe has rolled out a series of measures since late 2024, seeing the crisis as a chance for a green transition of the construction sector.
The European Affordable Housing Plan (2025) is the Commission’s flagship four-pillar crisis response. It boosts housing supply, mobilises investments to drive digitalisation and growth opportunities in the renovation sector, advances reforms, and protects the most vulnerable.
The plan is enhanced by a revision of state aid rules to facilitate national financial support of affordable and social housing, and by the Citizens Energy Package, to address energy poverty.
While the Commission has announced a first-ever EU Housing Summit in 2026, a new European Housing Alliance of member states, cities, regions, EU institutions, housing providers and associations civil society will implement the plan.
Complementing the plan, the European Strategy for Housing Construction focuses on boosting productivity and tackle inefficiencies in the construction sector. Reduced red tape, faster permitting, new digital tools, and promotion of modern building methods are the strategy’s tools towards a more affordable housing.
Under the EU Green Deal, the Renovation Wave (2020) also increases housing affordability and sustainability by cutting energy expenses and improving liveability. As 40 million Europeans were unable to afford heating in 2022, the project aims to double the annual renovation rate, reaching 35 million building-renovations by 2030.
Financed by Horizon Europe with roughly €120 million per year, the New European Bauhaus is the Commission’s 2025-2027 roadmap towards housing renovation and sustainability to drive housing supply and inclusion.
On the financial side, the Commission and the EIB are currently rolling out the pan-European Investment Platform, based on a partnership with European national promotional banks and international financial institutions. An additional €10 billion is being mobilized under the EIB’s Action Plan until 2027.
The way forward
Though ambitious, the EU’s impact on the housing crisis remains to be seen. “The housing plan is a good start, but it’s also a potential risk, because no concrete results would make Europeans more sceptical about the EU”, Kuiper told Euronews.
“Europe needs to deliver on its promises if it does not want to fail its citizens” and prevent the housing crisis from escalating into an issue of national identity, she concluded.
Cooperation with the member states remains central to face the ongoing crises.
“I really believe that we must define the general framework to give regional and local entities the tools to act and to regulate but not take a final decision about the measures that they must take. They know better what national policies are necessary”, said Giménez Larraz.
According to Tinagli, “European funds can match national ones to make them more effective. They can also provide public guarantees, making it easier to attract private capital, directing it towards affordable housing projects”.
