Europe’s Housing Crisis

Europe’s Housing Crisis: An Overview

Europe’s housing crisis has escalated over the years, with rising house prices and rents making affordable housing increasingly elusive. A staggering 55% increase in house prices and a nearly 27% rise in rents since 2010 starkly contrast with slower wage growth, creating significant stress for many, particularly younger generations.

Young Europeans, aged 18 to 29, are among the most affected by this housing squeeze. Many are forced to delay moving out or return to their family homes due to unaffordable housing alternatives. As job opportunities remain concentrated in urban areas, the competition for housing in cities has intensified, resulting in overcrowding and other compromises such as shared living arrangements or long commutes.

In several EU countries, renting has become nearly impossible. In places like Portugal, Spain, Ireland, Poland, and Bulgaria, renting a standard two-bedroom flat can consume over 80% of the median salary in many areas. Portugal is notably strained, with housing prices estimated at 25% above fair value by the European Commission, affecting even coastal towns and tourist hotspots.

In response, governments across the EU are attempting to address the crisis, albeit unevenly. In 2024, an average of 5.3% of GDP was invested in housing. The European Commission has initiated its first-ever EU-wide affordable housing plan aimed at curbing speculative behaviors, enhancing fairness, and increasing supply. This plan mobilizes at least €11.5 billion from the EU’s long-term budget, in addition to €43 billion already committed to social and affordable housing.

Despite these efforts, it is acknowledged that the effects will take time. The construction of homes cannot happen overnight, and markets need time to adjust. Meanwhile, the consequences of unmet housing needs are manifesting in delayed independence, restricted career choices, mental health strains, and postponed family planning for many young Europeans.

For many, housing has become the primary factor shaping their future, overshadowing education and career ambitions. The pressing question for an increasing number of young people is not where they wish to live, but whether living independently remains a feasible option at all.