MADRID/LONDON, Feb 27 (Reuters) — As the cost of housing continues to climb across Europe, prospective homeowners and renters are turning to increasingly unconventional solutions to secure a place to live. From shared ownership of individual bedrooms to collaborative mortgages for friends, and even fractional investments in rental properties, young Europeans are navigating a market that increasingly feels out of reach.
Over the past decade, house prices in the European Union have outpaced income growth by 10%, according to research from the European Commission, with younger generations bearing the brunt of the affordability crisis. While the EU executive announced plans in December to address housing affordability, concrete measures have yet to materialize, prompting private sector initiatives to fill the gap.
In Spain, Habitacion.com is pioneering the sale of individual rooms within shared flats. The company offers rooms for up to 80,000 euros ($95,200), significantly lower than the price of an entire one-bedroom flat in major cities like Madrid and Barcelona. The startup reported selling 200 rooms last year and currently maintains a waiting list of 32,000 prospective buyers, with properties listed in seven cities.
“People no longer get married, or if they do, they get married but don’t have children… or they do it much later,” explained Oriol Valls, Founder and CEO of Habitacion.com. “They require much smaller living spaces that are also much more affordable.” The company employs a compatibility questionnaire, assessing factors like lifestyle habits – including dishwashing routines and relationship status – to facilitate successful co-ownership or rental arrangements. Resales are managed through the company itself.
While, securing financing for these purchases can be challenging. Prospective buyer Alvarez, who requested anonymity, found that Habitacion.com could offer a 10-year personal loan from a regional bank at 6% interest, double the average mortgage rate. He was unable to find suitable rooms in Madrid. He acknowledged the scheme’s potential for young people lacking sufficient savings but noted its limitations, stating it “loses all appeal if I can’t live with my partner.”
Across the English Channel, developer Fairview in London has launched a “Buddy Up” scheme, connecting friends interested in joint property purchases with brokers and solicitors. The company also offers up to 2,000 pounds ($2,726) towards legal fees.
The return of low- or zero-deposit mortgages, largely absent since the 2008 financial crisis, is also offering a glimmer of hope for some. Banks in Britain, France, Germany, and Italy are cautiously reintroducing these options, though they typically require applicants to demonstrate high, stable incomes and remain relatively rare. Natalie and Martin Walker from West Yorkshire, England, utilized a zero-deposit mortgage last year after receiving an eviction notice while their baby was just one month old, after four years of renting. “The sense of stability that it brings you, that’s the biggest delight for me,” Natalie Walker said.
In Spain, Carlos Sempere, a 36-year-old industrial engineer renting in central Madrid, has taken a different approach. Unable to afford a property in the city where prices average around 1 million euros, he invested in a rental property in southern Spain through PropHero, an investment company. “Either it helps me pay the rent, or I sell it in the future,” Sempere explained. PropHero also facilitates fractional ownership of rental apartment buildings in Spain and Ireland, with stakes available for as little as 20,000 euros.
According to Patricio Palomar, head of alternative investments at AIRE Partners, these unconventional solutions are a symptom of a deeper problem. “All these housing solutions serve to display how people are getting poorer.”