Europe is confronting its most acute housing crisis in decades, as both home prices and rents have climbed to levels far beyond what millions of residents can realistically afford.
New data from the European Housing Advisory Council, submitted to the European Commission, captures the scale of the problem with stark precision. Between 2010 and 2024, housing prices across the European Union rose by 55.4%, while rents increased by 26.7%. In several member states, the surge exceeded 200%, transforming housing from a basic social good into a speculative investment vehicle and drastically limiting access to decent, affordable homes.
Low-income households are bearing the brunt of the crisis. In many countries, they now spend nearly 40% of their income on housing—well above the internationally accepted threshold of 25%, as defined by the United Nations for affordable living. Yet the Council stresses that affordability extends beyond economic metrics: it also encompasses the broader quality of urban life, including access to public services, transportation, green spaces, and child-friendly infrastructure.
Central to the problem is the financialization of housing. The growing dominance of investment funds, large real-estate corporations, and short-term rental platforms has artificially inflated demand. Properties are increasingly purchased not to be lived in, but to be held vacant as assets that appreciate over time. As a result, in many European cities a significant share of the housing stock remains unoccupied or withheld from the market, further tightening supply and worsening the imbalance.
Gentrification is adding an additional layer of strain, reshaping entire districts across the continent. While urban redevelopment often brings improvements to public spaces and boosts municipal revenues, it frequently results in the displacement of low-income residents and sharp rent hikes. The pressure has now spread well into the middle class, with key workers—especially in healthcare and education—struggling to secure homes close to their workplaces.
The generational divide is also widening. Nearly half of Europeans aged 18 to 34 still live with their parents because they cannot afford to move out, while young adults living alone face twice the risk of housing insecurity compared to older groups. In many urban centres, there is not a single home that would be considered affordable for an average-earning young worker.
At the same time, geographical inequality is deepening across the continent. Major cities are becoming increasingly out of reach, whereas many rural regions are experiencing falling property values and shrinking populations. Persistent underinvestment in transport links, digital infrastructure, and public services exacerbates the divide, directing capital almost exclusively toward areas with the highest returns.
According to the European Investment Bank, housing supply in 2025 will meet only half of annual demand. This is happening even as hundreds of thousands of homes remain empty or underused. The Council recommends activating this dormant stock through targeted, neighbourhood-level renovation programs that both expand available housing and improve overall living conditions.
The Council’s report includes 75 recommendations forming the backbone of a new European housing strategy. A central priority is the elimination of homelessness by 2030, supported by the “Housing First” model, harmonised quality standards, and the integration of housing policy into the EU’s economic governance framework. The report also proposes the introduction of levies on short-term rentals and a significant expansion of social housing.
Protecting vulnerable populations is another crucial objective. The Council calls for an EU-wide directive against housing discrimination, stronger tenant protections, and dignified living conditions for refugees and asylum seekers. In terms of urban planning, it advocates the creation of “social value zones,” better use of public land through land banks, and stricter regulation of short-term rentals.
The report places particular emphasis on the green transition. It warns that Europe will not meet its climate goals without large-scale renovation of existing homes and the development of resilient, environmentally sustainable neighbourhoods. It notes that without the energy-efficiency improvements made between 2000 and 2023, household energy consumption today would be 29% higher and annual energy bills roughly €540 more expensive.
Ultimately, the Council concludes that Europe cannot build its way out of the crisis. What is required is a fundamental shift in approach: curbing speculation, safeguarding vulnerable groups, revitalising cities in a sustainable manner, and establishing a transparent EU-wide system for monitoring housing trends. Only through such changes, it argues, can housing be restored as essential social infrastructure and a foundation for resilient, equitable communities.
