Housing crisis: why prices are rising and what the EU is doing about it
Rising house prices and rents are a big concern for many Europeans. Read on for key facts and what the EU is doing about the issue.
Across Europe, finding a place to live that is affordable, decent and secure has become increasingly difficult. For many people, rents are rising faster than salaries. Buying a first home feels out of reach. Young adults delay moving out of their parents’ homes, families struggle to find larger homes, and workers are sometimes forced to live at great distances from their workplaces. Housing costs are putting pressure on people’s daily lives and long-term plans.
This article explains the reasons behind the housing crisis in Europe and provides key statistics. It also looks at the practical solutions currently being developed by the European Commission and the European Parliament to make sure people have access to decent, sustainable and affordable housing across Europe.
Is there really a housing crisis in Europe?
Housing affordability: key statistics
One way to measure whether housing costs - rent or mortgage payments - are too high is to look at the housing price-to-income ratio. If housing costs exceed 40% of disposable income, it is a sign that households are facing issues with housing.
According to Eurostat, the EU’s statistical office, in 2024 housing costs in the EU exceeded 40% of disposable income for almost 10% of households in EU cities and 6.3% of households in rural areas.
However, housing is a multifaceted issue with diverse trends and dynamics in every member state. For example, over a quarter of Greeks (29%) living in cities had housing costs exceeding 40% of their income, while only 2.6% of Cypriots in cities faced the same issue.
Around 35.5% of household income in Greece was used to cover housing costs in 2024, the highest share in the EU.
Rising house prices and rents
Between 2015 and 2024, house prices in the EU rose on average by 53%. The biggest increases were observed in Hungary (+209.5%), Lithuania (+135%) and Portugal (+124.4%).
Renting in the EU has also become costlier. Between 2010 and the first quarter of 2025, rental prices rose by 27.8 % on average. Rents went up in all EU countries except Greece (-11%). The biggest rises were in Estonia (+220%), Lithuania (+184%), Hungary (+124%) and Ireland (+115%).
Why is there a housing crisis in Europe?
EU institutions point to limited supply as one of the key drivers of the housing crisis. With not enough new dwellings to accommodate housing demand, prices tend to go up.
The European Investment Bank (EIB) estimated that the EU needed 2.25 million additional housing units in 2025. This was around 50% more than the number of homes actually being built.
Why is there a housing shortage?
The role of the financial crisis and the COVID-19 pandemic
The 2008 global financial crisis led to a major decline in investment in new housing. The COVID-19 pandemic slowed residential construction down still further by disrupting permitting processes, delaying deliveries of materials and creating labour shortages.
Growing demand for housing in cities
As cities continue to attract people for work and studies, populations are increasingly concentrated in large and medium-sized urban centres. Meanwhile, many rural areas are facing ongoing depopulation.
This imbalance sharpens the contrast between soaring housing demand and overcrowding in cities and increasing numbers of vacant homes in the countryside.
Not enough social housing
At the same time, the supply of social housing in urban centres has not kept pace with population growth in recent years. In 2021 there were around 14 million social housing dwellings across the EU, accounting for just 8% of the total stock (down from 11% in 2010).
Short term rentals
In coastal cities and tourist destinations, the housing shortage can also be partly explained by an increase in short-term rentals. As this market has mushroomed in recent years, a share of houses and flats have been diverted away from potential long-term residents.
A total of 854.1 million nights were booked in the EU in 2024 via four large online platforms (Airbnb, Booking, Expedia Group and Tripadvisor); an 18.8% increase compared with 2023 (719.0 million nights), setting a new record high.
What is the impact of the crisis on Europeans?
Housing gaps and inequalities in the EU are deep-rooted and play out in many different ways.
Housing deprivation, overcrowded homes, cost overburden
Parliament research shows that low-income families are among the most affected by the housing crisis, with over 27% of low-income households facing the highest cost overburden and severe housing deprivation.
Adequate living space is defined as at least one room per adult couple, single adult, pair of siblings aged 12 to 17, single child over 12, or pair of children under 12, but 17% of Europeans live in overcrowded homes that do not provide this.
The situation is even more acute for migrants and ethnic minorities: over 33% of non-EU citizens live in overcrowded housing (compared with around 14% of EU nationals), while 19% face housing cost overburden (compared with around 8% of nationals).
The lack of adequate housing also affects persons with disabilities, with under 29% reporting that their homes meet their needs. This group also experiences higher cost overburden rates than the general population.
How the housing market affects young people
The rising housing costs experienced by millions of EU citizens are hitting young people particularly hard. In 2023, young people across the EU left their parental home on average at the age of 26, and in certain Member States almost 70% of young adults aged 18 to 34 had no alternative but to continue living with their parents.
These delays in leaving the family home increase generational inequality, forcing younger generations to postpone important life decisions, such as starting a family, living independently or relocating for professional reasons.
How to tackle the housing crisis: EU action explained
While housing policy is mainly the responsibility of national, regional, and local government, shared root causes are emerging across EU countries. This calls for a multi-level governance approach that respects the specific characteristics of each national housing market.
Affordable housing high on EU political agenda
That is why, following the 2024 European elections, the President of the European Commission, Ursula von der Leyen, identified housing as one of the EU’s social priorities for the new term, and nominated Dan Jørgensen as the first ever EU Commissioner for Housing.
The European Parliament set up in 2025 a special committee to analyse the root causes of the housing crisis and propose ways the EU could help tackle it.
Increasing EU funding for affordable housing
In 2025, the European Commission and the European Investment Bank announced an action plan to invest around €10 billion over the following two years. The aim is to finance projects for new homes, renovation of existing housing stock, and research and innovation in building materials and construction.
Also in 2025, the European Parliament approved new rules on EU cohesion and social funding so that it can be allocated to upgrading existing housing stock and investing in new construction, with particular focus on social housing. MEPs also called on EU countries to "at least double" their funding for affordable housing.
More EU solutions in the pipeline
Finally, both the Commission’s “Affordable Housing Plan” presented in December 2025 and the European Parliament’s proposals from March 2026 set out practical steps to raise housing standards, expand Europe’s construction and renovation capacity, and channel financial support to those most affected by the crisis.
These priorities are expected to translate into action throughout 2026, with new proposals and legislation aimed at:
- curbing the impact of short-term rentals,
- speeding up and simplifying building and renovation permits,
- unlocking both public and private investment,
- tackling the labour shortage in the construction sector, and
- strengthening productivity and innovation in construction.
