Housing Crisis in Europe. What can the EU do to solve it?

The housing crisis has emerged as a pressing issue on the European Union's policy agenda. The Austrian Federal Chamber of Labour (AK EUROPA) has published a document addressing this crisis, highlighting the need for EU intervention. The document emphasizes that while Ursula von der Leyen, the EU Commissioner, is keen on tackling the issue at the highest political level, many proposed measures remain vague and lack a fully developed social dimension. Civil society and trade unions have been vocal about the need for a more equitable approach to housing.

Due to inflation in recent years, housing has become a significant concern for many European citizens. Rents and property prices have been steadily increasing, outpacing wage growth. As a result, a growing proportion of individuals are forced to allocate larger portions of their monthly income toward rent, leaving less for other essential expenses. A Eurobarometer survey revealed that rising living costs significantly influenced voting patterns in the 2024 European elections. In response, Von der Leyen has elevated housing to a distinct policy area within the EU Commission, assigning Dan Jørgensen as the EU Commissioner for Energy and Housing to explore solutions, despite housing policy not being a direct EU competency.

The EU's new housing policy centers around creating a European plan for affordable housing. This plan aims to increase investment in both affordable and sustainable housing. A pan-European investment platform is proposed to attract both private and public financing, notably through de-risking investments. Although the EU plans to double cohesion funding for affordable housing and relax state aid rules for housing projects, challenges remain regarding Member States' abilities to co-finance these initiatives due to strict EU fiscal regulations.

One of the major obstacles in implementing these ambitious housing initiatives is the labor shortage in the European construction industry. To revitalize this sector, high-quality and attractive job opportunities must be created, moving away from the current model that relies on cheap and precarious labor. The document suggests that public procurement rules could be revised to include social and environmental criteria, which would help transform the construction industry by improving transparency and reducing fraud.

The European Trade Union Confederation (ETUC) has addressed the housing crisis with a resolution that highlights not only the rising costs but also the quality of housing. The ETUC attributes the crisis largely to the financialization of the housing market, arguing that insufficient regulation is a key issue. They advocate for increased state involvement and investments, moving away from the mantra of reduced state activity, which has led to issues like privatization and real estate speculation.

The housing crisis has also exacerbated homelessness across Europe, affecting over one million individuals, including around 400,000 children. While a home alone cannot resolve the multifaceted problem of homelessness, securing stable housing is crucial. Strategies like "Housing First," successfully implemented in Finland, emphasize the importance of providing housing before addressing other issues. The EU is beginning to focus on homelessness through initiatives like the EPOCH Programme, which promotes best practices among Member States.

Reviving public or social housing on a larger scale is deemed essential not only to address homelessness but also to provide affordable housing solutions. The European Economic and Social Committee (EESC) advocates for supporting national initiatives and sharing best practices. The document suggests that models like Austria's non-profit housing could serve as a blueprint for addressing the housing shortage, which is often driven by speculative construction rather than a lack of investment.