Housing in the EU: more than 2 million new homes per year needed by 2035 to meet demand

The document is published by the Joint Research Centre, the European Commission's science and knowledge service, which provides independent scientific advice and support to EU policies. The content highlights the pressing need for affordable housing solutions across Europe as the continent grapples with increasing housing demand and rising costs.

Since the financial crisis of the 2010s, homeownership in Europe has become increasingly difficult, worsened by the COVID-19 pandemic. By the end of 2024, house prices in the EU surged approximately 55% compared to 2015, outpacing the 49% growth in net household income. Housing, water, and energy costs constituted 23.6% of total household expenditures in 2024, underscoring the affordability crisis.

In response to public concern, the European Commission has introduced a European Affordable Housing Plan. The Joint Research Centre supports this initiative by analyzing investment requirements for housing by 2035, addressing local factors influencing housing prices, and examining the intergenerational gap in housing affordability amid demographic changes. The initiative also encompasses the New European Bauhaus, promoting research and innovation for sustainable housing solutions.

To meet future housing demands, the JRC estimates that over 2 million new homes per year will be necessary by 2035. This includes an additional 7.14 million dwellings beyond the 17.06 million already planned. These new units will address housing shortages stemming from insufficient construction between 2010 and 2024, demographic shifts, and replacement needs, requiring an annual investment of about €150 billion, totaling €1.68 trillion by 2035.

Major cities and capital regions are projected to experience significant housing pressures due to ongoing population growth, urbanization, and limited land availability. The top 30 metropolitan areas are expected to account for 35.5% of the total EU housing needs, with high demands also noted in coastal and tourist regions already facing dense settlement issues.

Municipalities with good transportation and digital accessibility, a high share of working-age population, and declining household sizes tend to witness higher housing prices. Coastal cities also experience elevated costs, and high prices in one area can influence neighboring regions.

Despite the rise in short-term rentals, they represent only 1.2% of the EU's total housing stock, with rural areas slightly higher at 1.5%. In tourist hotspots, this figure can reach up to 20%, indicating significant local variations that can impact overall housing availability.

Younger generations, particularly those under 35, face declining homeownership ratios and lower real incomes compared to previous cohorts. The 1980s generation is 6.7 percentage points less likely to own a home than those born in the 1970s. Rising mortgage rates and stringent lending rules further complicate homeownership for young adults, leading to increased tenant proportions and housing cost burdens, especially in urban areas.

The document also references various research reports related to housing investment needs, territorial factors affecting housing prices, and the dynamics of intergenerational fairness concerning income and housing amidst demographic changes. The European Affordable Housing Plan aims to address these critical issues through comprehensive policy action.