A coordinated EU approach to housing

This briefing, titled "A coordinated EU approach to housing," is published by the European Parliamentary Research Service (EPRS) and authored by Marketa Pape. It aims to provide Members of the European Parliament with an overview of the escalating housing crisis within the European Union, particularly in light of the recent cost-of-living crisis. The document outlines the EU's current and potential roles in addressing this pressing issue.

The briefing addresses a long-standing problem regarding housing affordability across the EU. Recent years have seen rising construction costs, increased mortgage rates, and a slowdown in new housing construction, making homeownership increasingly difficult. Additionally, viewing housing primarily as an investment vehicle has led to price surges that outpace income growth. As a result, a growing number of individuals struggle to find affordable housing, leading to increased homelessness and a rise in the housing cost overburden rate, where households spend over 40% of their income on housing.

The document also highlights the environmental implications of the housing sector, noting that buildings account for 40% of the EU's energy consumption and 36% of its CO2 emissions. Renovating the housing stock to decarbonize is deemed essential for achieving the EU's climate objectives and for alleviating energy poverty.

While housing is primarily the responsibility of individual Member States, the briefing details how the EU indirectly influences housing through legislation, policy guidance, and significant funding. A significant political development is the establishment of a dedicated portfolio for Energy and Housing in the new European Commission, under Commissioner Dan Jørgensen, indicating a more coordinated EU-level approach.

Between 2010 and 2023, average house prices across the EU rose by 48%, while rents increased by 22%. The number of homeless individuals has surged by approximately 70% over the past decade. The construction sector faces challenges such as contraction and labor shortages. Importantly, the crisis affects not only low-income groups but also middle-income individuals and essential workers who can no longer afford housing at market rates.

Key legislative measures include the revised Energy Performance of Buildings Directive (EPBD), which mandates that all new buildings be zero-emission by 2030. It also sets targets for Member States to reduce residential energy use by 16% by 2030 and 20-22% by 2035, focusing on renovating the worst-performing buildings. Additionally, EU competition rules regulate how Member States can subsidize social housing, with some stakeholders arguing that the current definition of "disadvantaged citizens" is too narrow.

The EU has multiple funding instruments aimed at supporting housing, with an estimated €100 billion available for energy efficiency renovations until 2030. Key sources include the Recovery and Resilience Facility (RRF), the European Regional Development Fund (ERDF), and the new Social Climate Fund starting in 2026. The European Investment Bank (EIB) is a significant financier for social and affordable housing and is set to launch a new action plan to support housing investments.

In December 2024, the European Parliament established a Special Committee on the Housing Crisis to analyze the situation and propose solutions. The European Commission is preparing a "European affordable housing plan" and gathering public input. Proposed amendments to cohesion policy funds aim to provide greater flexibility and incentives for Member States to reallocate funds towards affordable housing projects.

The document emphasizes the urgent need for a coordinated approach at the EU level to combat the housing crisis, advocating for increased investment in socially inclusive and sustainable housing initiatives.