Europe cannot simply build its way out of the housing crisis

The resource “Europe cannot simply build its way out of the housing crisis” is an article published by Demos Helsinki, a think tank working on societal and governance innovation. It is authored by Erkki Perälä and Liisa Perjo. The article argues that Europe’s housing challenge cannot be solved by relying mainly on new construction, because housing affordability, social justice, and environmental limits are tightly interconnected.

The article highlights worsening affordability across the EU: between 2010 and 2022, EU house prices increased by 47% and rents increased by 18%. It points to steep national-level examples on the “worst end of the scale”, noting Estonia’s house prices rising by 192% and rents by 210% over the same period. The authors describe growing institutional attention at EU level, including housing appearing on the European Commission’s agenda, mayors from major European cities urging Commission President Ursula von der Leyen to address the issue, and the establishment of a European Commission housing commissioner and a European Parliament Special Committee on the Housing Crisis. The article also references the EU citizens’ initiative HouseEurope! as a sign of public demand for systemic change.

According to the authors, years of pursuing the conventional solution—expanding supply through construction—have contributed to a combined crisis that includes financialisation of housing markets, increased social inequalities, and major environmental impacts. They state that housing policy often develops “in a vacuum”, making it difficult for cities, policymakers, and developers to consistently account for environmental and social effects, or how housing interacts with climate and biodiversity pressures. As a result, approaches that could advance affordability and sustainability at the same time remain underexplored.

The article frames the built environment as a major emissions source, accounting for up to 40% of global greenhouse gas emissions. It distinguishes operational carbon (e.g., emissions from heating and energy use) from embodied carbon (emissions from extracting, producing, transporting materials, and demolishing buildings). It notes that embodied carbon is often excluded from city-level climate targets because it is classified under scope 3 emissions. As an illustration, the article cites a study suggesting that the UK’s target of building 300,000 new apartments annually in England would consume the entire 1.5°C carbon budget by 2050. Urbanisation is also described as a major driver of biodiversity loss, reinforcing the claim that construction-led solutions can intensify ecological risks if pursued without fundamental changes.

The authors propose “housing sufficiency” as an alternative direction, shifting focus from continual expansion to better utilisation of existing housing stock and more sustainable living arrangements. The article lists policy tools intended to increase availability without building more, including incentives for downsizing, regulations on short-term rentals to free homes for long-term residents, higher property taxes on vacant or underutilised housing, co-housing approaches that reduce per-capita floor space through shared facilities, and subdividing large apartments into smaller units (linked to decreasing average household sizes in many European countries). These measures are presented as “stackable” and mutually reinforcing.

The article concludes that achieving affordable housing within planetary boundaries requires new policy and planning solutions, alternative funding models, and concrete housing innovations. It argues that social equity and ecological goals should be aligned rather than treated as competing priorities, and it calls for moving beyond an “outdated paradigm” of ever-increasing construction toward systemic transformation in how European cities enable people to live well while reducing ecological harm.