Overview of the Report and Its Origin
The European Joint Research Centre (JRC), the science‑and‑technology arm of the European Commission, produced this analysis on housing demand and affordability across the EU. Drawing on extensive research and data collection, the JRC’s experts assess future housing needs, investment requirements, and the socioeconomic factors influencing prices, with a focus on sustainable, affordable solutions for European citizens.
Current Housing Affordability Challenges
Housing in the EU has become increasingly unaffordable. By the end of 2024, home prices were about 55 % higher than in 2015, outpacing the 49 % rise in net household income per capita over the same period. Housing‑related costs (including water and energy) now represent roughly 23.6 % of total household expenditure, putting pressure on families, especially younger generations.
Projected Demand Through 2035
Projections for 2025‑2035 indicate that Europe will need more than 2 million new homes each year to meet demand. In addition to the 17.06 million units already planned, an extra 7.14 million dwellings are required. These include:
- Shortfalls from insufficient construction between 2010 and 2024.
- New demand driven by demographic shifts from 2025‑2035.
- Replacement and amortisation needs adjusted for regional construction gaps.
Investment Needed for Sustainable Housing
The annual investment gap to achieve the required construction pace is estimated at about €150 billion, accumulating to a total of €1.68 trillion by 2035. This funding is essential for delivering energy‑efficient, climate‑compatible dwellings that align with the EU’s broader sustainability goals and the New European Bauhaus initiative.
Regional Hotspots and Urban Pressure
Major cities and capital regions face the strongest housing pressures due to population growth, urbanisation, and limited land availability. The top 30 metropolitan areas alone account for 35.5 % of the EU’s total expected housing need. Coastal and touristic regions also experience high demand, compounded by dense settlement patterns and limited expansion space.
Factors Linked to Higher Prices
Research identifies several territorial determinants that correlate with elevated housing prices: high transport and digital accessibility, a larger share of working‑age population, declining household sizes, and higher employment and income levels. Proximity to coasts and spill‑over effects from neighboring high‑price areas further amplify price differentials.
Short‑Term Rentals: Limited Overall Impact
Short‑term rentals (e.g., via Airbnb, Booking.com) constitute about 1.2 % of the EU housing stock, rising to 1.5 % in rural areas. In popular tourist destinations, the share can reach up to 20 % of local dwellings, influencing local market dynamics but remaining a relatively small component of the overall housing supply.
Youth Facing Affordability Barriers
Young Europeans, particularly those under 35, are disproportionately affected. Thirty‑year‑olds born in the 1980s are 6.7 percentage points less likely to own a home than their 1970s counterparts, and 5.5 points less likely than those born in the 1960s. Delayed household formation, higher tenancy rates, and increased rent‑burden (over 30 % of disposable income for many) underscore the intergenerational equity challenge.
Pathways to Sustainable, Affordable Solutions
The JRC’s findings support the European Affordable Housing Plan, emphasizing the need for coordinated investment, innovative construction techniques, and policy measures that promote energy‑efficient buildings. The New European Bauhaus framework encourages interdisciplinary collaboration to create housing that is not only affordable but also environmentally sustainable, socially inclusive, and culturally resonant.
Key Takeaways for Stakeholders
- Europe must add over 2 million homes annually to close the demand gap.
- €150 billion per year is required to fund sustainable construction until 2035.
- Urban centres and coastal regions are the most pressure‑sensitive.
- Addressing youth affordability requires targeted policies on ownership, rent regulation, and financing.
- Integrating sustainability into housing design is central to meeting both climate and social objectives across the continent.