Resource context
This Bloomberg feature article, “Europe’s Great Housing Crisis Is Only Getting Started,” is published by Bloomberg and authored by Laura Malsch and Niclas Rolander. It examines the sharp downturn in residential construction across several European countries and links it to affordability pressures, policy choices, and wider economic and political risks.
Construction slump across Europe
The article reports a steep fall in homebuilding activity in some of Europe’s wealthiest housing markets. New building permits dropped by more than 27% in Germany in the first half of the year, while permits were down 28% in France through July, and UK homebuilding is expected to fall by more than 25% for the year. Sweden is described as facing its worst construction slump since the 1990s, with building rates at less than a third of what is considered necessary to meet demand.
Household impacts and affordability shocks
A case study in Düsseldorf illustrates how delays and financing conditions translate into cancelled projects. A family planning a self-build home waited 16 months for a permit; during that period mortgage rates tripled and expected construction costs increased by €85,000 (about $90,000). Despite stable public-sector employment and access to a building lot provided by family, the project became unaffordable—used in the article to underline how strained conditions can affect even relatively advantaged households.
Spillovers to larger developments and regional growth
The downturn is presented as affecting both single-family homes and large-scale residential projects. Germany’s biggest landlord, Vonovia SE, is reported to have shelved all new construction indefinitely. The article also links housing shortages to industrial policy goals: in northern Sweden, the expansion around a battery-cell factory project is portrayed as constrained by insufficient housing supply, making it harder for a small municipality to accommodate rapid hiring.
Policy targets missed and social tension risks
Several governments are described as falling short of housing commitments. In the UK, homebuilding has repeatedly missed a target of 300,000 homes per year set in 2019. In Germany, economists cited in the article estimate that the government will not reach its goal of adding 400,000 new homes annually until at least 2026. The piece argues that scarcity forces households to spend a larger share of income on housing and may deepen social divides. It also notes concerns that competition for limited housing can exacerbate tensions around migration, citing a local example where tenants were moved to make space for refugees.
Structural causes: finance, regulation, and the retreat of public housing
The article frames the crisis as the outcome of rising financing costs, elevated construction-material costs, administrative delays, and tighter energy-efficiency rules. It also places current shortages in a longer historical shift away from state-led housing provision toward private-sector delivery. For Germany, it cites a decline in social housing from around 4 million units in the late 1980s to a little more than 1 million by 2020, and draws parallels to the UK’s reduction in council housing after large-scale sales in the 1980s.
Proposed reforms and uncertain outlook
Political responses described include efforts to simplify licensing and accelerate planning systems, alongside discussion of incentives to support the construction sector. However, the article emphasizes uncertainty: limited fiscal appetite after the pandemic and inflation-control efforts constrain public spending, while business failures and bankruptcies in construction may reduce future capacity. It cites that about 45,000 residential property builders have shuttered in the UK over five years, and that 1,145 Swedish construction firms filed for bankruptcy in the first 10 months of the year—35% more than in 2022—contributing to expectations that shortages could persist for years.