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

The Joint Research Centre (JRC) of the European Commission published a report addressing the pressing need for housing in the European Union. The report highlights that, in order to meet the increasing demand for homes, more than 2 million new housing units will be required annually by 2035. This urgent focus on housing comes in the wake of rising household numbers and financial challenges faced by citizens in the aftermath of the financial crisis and the COVID-19 pandemic.

Since the financial crisis of the 2010s, homeownership in the EU has become increasingly difficult. By the end of 2024, house prices had surged by approximately 55% compared to 2015, while net household income per capita only grew by 49% during the same period. In 2024, housing, water, and energy accounted for 23.6% of total household expenditure, placing significant financial strain on many households.

In response to public concern regarding housing affordability, the European Commission introduced the European Affordable Housing Plan. The JRC's role in this strategy involves research on investment needs in housing by 2035, examining area-specific factors affecting housing prices, and exploring the relationship between intergenerational gaps in housing affordability and demographic change. The initiative emphasizes sustainable and quality housing solutions through the New European Bauhaus.

Projections for the period from 2025 to 2035, calculated by the JRC, indicate that in addition to the 17.06 million housing units already planned, an additional 7.14 million dwellings will be necessary. This figure represents cumulative shortfalls from inadequate construction between 2010 and 2024, as well as new demands arising from demographic shifts. The required annual investment to meet these housing demands is estimated at around €150 billion, amounting to a total of €1.68 trillion by 2035.

Major cities and capital regions are expected to experience the most significant housing pressures due to ongoing population growth, urbanization, and limited land availability. The top 30 metropolitan areas are projected to account for 35.5% of the overall housing needs in the EU. Coastal and tourist regions are also likely to see high housing demands, further necessitating new construction in these areas.

Municipalities with high transport and digital accessibility, a significant share of the working-age population, and declining household sizes are positively correlated with higher housing prices. Additionally, areas near the coast tend to have elevated prices, and high prices in one location can influence neighboring areas.

Younger generations, particularly those under 35, are increasingly facing barriers to homeownership. Compared to the previous generation, individuals born in the 1980s are 6.7 percentage points less likely to own a home by age 30. Delays in leaving the parental home and rising rental costs contribute to a growing proportion of tenants among younger adults, who often spend over 30% of their disposable income on rent, particularly in urban areas. This trend poses significant demographic challenges, including delayed household formation and childbearing.