EU Housing Crisis: Parliament Calls for Action as Prices Soar

The European Parliament has adopted its first-ever report dedicated to addressing the escalating housing crisis across the European Union, signaling a significant shift towards a coordinated bloc-wide response. The report, passed with 367 votes in favour and 166 against, calls for concerted EU action to alleviate precarious living conditions and tackle affordability challenges that have gripped the continent.

The resolution emphasizes the need to streamline regulations, bolster investment in construction and innovation, and mobilize greater financial support to increase housing supply. The move comes as housing has become a “pan-European social emergency,” according to the report, exacerbated by the 2008 financial crisis and the subsequent economic disruptions caused by the 2020 pandemic.

Data cited in the report reveals a stark reality: house prices across the EU have surged by 60.5 percent since 2015, even as rental costs have increased by 28 percent over the same period. Ownership rates among 24 to 35-year-olds have declined by 6 percent since 2005, and one in ten Europeans are now struggling to meet their rental obligations.

The crisis extends beyond individual hardship, impacting the functioning of the EU’s single market and hindering economic growth. The European Commission’s Affordable Housing Plan, launched in response, aims to address these issues by increasing housing supply, attracting investment, and providing immediate support to citizens.

The affordability gap is widening, with prospective homebuyers in the EU now needing to earn roughly the equivalent of several years’ salary to purchase a home, often exceeding eight to ten years of gross income. In some capital cities, this ratio climbs to 12-15 years. Renters are too feeling the strain, with approximately 30 to 40 percent of income allocated to housing costs in high-demand cities, a figure that is increasing for young renters.

“In many countries, salaries have not kept up with inflation. Then the real estate market pushed prices up to 60 percent in 10 years. Here’s not citizens’ fault. It’s a lack of public policy, attention, and monitoring,” stated Irene Tinagli, a Member of the European Parliament (MEP) and president of the EP’s Special Committee on the Housing Crisis, in remarks to Euronews.

The report highlights a range of contributing factors to the crisis, including a shortage of social housing, overcrowding, rising homelessness, and a growing trend of young adults delaying leaving their family homes. Eurostat data confirms a more than 60 percent increase in EU house prices since 2015, outpacing income growth, with rents rising by over 20 percent.

Regional disparities are evident, with significant price surges in countries like Hungary, Portugal, and Lithuania, while Finland experienced more moderate increases or even slight declines. Western and northern European cities remain the most expensive overall.

The shift from homeownership to rental accommodation is also notable. A decade ago, around 70 percent of Europeans owned their homes; today, that figure has fallen to approximately 68 percent, while rental rates have climbed to roughly 32 percent – the highest level in decades.

Demand for housing is being driven by urbanization, population growth, migration within the EU, and the increasing prevalence of smaller households. Simultaneously, supply is constrained by high land prices, rising construction costs, restrictive zoning regulations, and lengthy permitting processes. The European Investment Bank (EIB) estimates a shortfall of millions of homes, with current construction levels falling short of required levels.

Financial dynamics have also played a role. The period between 2015 and 2022, characterized by ultra-low interest rates, fueled a housing boom, driving up prices by approximately 63.6 percent. However, the European Central Bank (ECB) began raising interest rates in July 2022, increasing the deposit facility rate to a peak of 4 percent by September 2023, making mortgages less affordable and contributing to increased rental demand.

Investment demand, particularly in cities like Madrid and Barcelona, is adding further pressure. In 2024, foreign buyers accounted for 7 percent of home sales in Madrid and 14.3 percent in Barcelona, with institutional investors and large funds driving over 50 percent of total real estate investment. The rise of short-term rentals has also reduced the availability of long-term housing in popular tourist destinations.

The consequences are widespread, with nearly 48 percent of 18-to-34-year-olds currently living with roommates, despite over half expressing a preference for independent living. Many are delaying leaving the family home altogether. Social housing supply is insufficient to meet demand, resulting in long waiting lists and limited access for low- and middle-income households. An estimated 1.28 percent of the EU population currently experiences homelessness, a 30 percent increase since 2019 and a 70 percent rise over the past decade.

While housing policy remains largely a national competence, the EU is seeking to influence the situation through funding and non-binding guidelines. Elizabeth Kuiper, Associate Director at the European Policy Centre in Brussels, noted that Europe has historically overlooked the scale of the crisis, considering it primarily a national issue. She emphasized the importance of multi-level cooperation, with local authorities playing a stronger role in identifying solutions and communicating them to EU policymakers.

MEP Borja Giménez Larraz, rapporteur of the report, underscored the principle of subsidiarity, stating that the report recommends actions at regional and local levels, with the EU providing support and contributing to solutions, but leaving final decisions to member states.

The EU has mobilized over €43 billion for 2021-2027, with an additional €10 billion earmarked for 2026-2027. In April 2024, the Commission estimated that €100 billion will be allocated to energy efficiency renovation projects by 2030. Funds are also being channeled through the Recovery and Resilience Facility, InvestEU, and Horizon Europe, with a focus on social housing, energy efficiency, and sustainable access to housing.

The Commission’s Affordable Housing Plan, launched in 2025, focuses on boosting housing supply, mobilizing investment, advancing reforms, and protecting vulnerable citizens. This plan is complemented by revisions to state aid rules and the Citizens Energy Package, aimed at addressing energy poverty.

The Commission has announced plans for a first-ever EU Housing Summit in 2026, and a new European Housing Alliance will be established to implement the plan, bringing together member states, cities, regions, EU institutions, housing providers, and civil society organizations.

Kuiper cautioned that the success of the EU’s efforts remains uncertain, stating that failure to deliver concrete results could erode public trust in the EU. Tinagli emphasized the potential for EU funds to complement national resources and attract private capital towards affordable housing projects.