Resource overview
This resource is the CEB Discussion Paper “Social and affordable housing in Europe: A market gap analysis”, published by the Council of Europe Development Bank (CEB) and authored by Leonardo Porta (CEB Loans & Social Development Directorate, International Affairs & Analysis Unit) and overseen by Florian Meyerhoefer. It examines social and affordable ("low-income") housing across the EU-27, focusing on how demand, supply and policy settings create regional “market gaps”, and how the COVID-19 period reshaped housing market dynamics.
Why social and affordable housing matters
The paper frames housing as central to inclusion and social cohesion: housing costs are often the largest household expenditure, and location (access to jobs, education, transport and healthcare) shapes opportunities. It links affordability pressures to widening socio-economic disparities, noting evidence that inequality measured after housing costs is higher than inequality measured on total disposable income in advanced European countries.
Market tightness across European regions (2012–2019)
Using a quantitative indicator approach for 2012–2019, the paper divides the EU-27 into Northern Europe (e.g., Ireland, Germany, Austria, Denmark, Sweden, Finland), Southern Europe (e.g., France, Portugal, Spain, Italy, Greece) and Central & Eastern Europe (CEE). It finds Northern Europe generally faces the strongest demand pressure (population and household growth, urban pressures, low vacancy) while CEE shows weaker demand indicators overall but high deprivation and affordability barriers in fast-growing or urban areas. Southern Europe shows mixed demand conditions, with Greece highlighted as particularly strained on affordability indicators.
Supply constraints and vacancy dynamics
Supply conditions also vary widely. Northern Europe has comparatively high construction activity, but still experiences tight urban conditions due to very low vacancy rates and rent control regimes. The paper cites OECD data indicating Germany’s vacancy rate is around 4% (described as a minimum needed to support labour mobility), with Sweden reportedly even lower. In Southern Europe, vacancy rates can be high due to past boom-bust cycles, yet urban rental markets are tightening as unsold stock shifts into rentals; structural underinvestment in social housing limits flexibility. In CEE, construction activity is low overall, and large mismatches can coexist with high vacancy rates, reflecting location and quality misalignments.
Market gap ranking and key patterns
The study combines demand and supply rankings (equal weights) into a “gap” indicator. Within Northern Europe, Luxembourg, Denmark and Austria show the worst gap rankings; Belgium and Sweden also rank relatively poorly. In Southern Europe, Greece records the worst gap, followed by Italy and Portugal. In CEE, Bulgaria ranks worst, with Poland and Croatia also showing large gaps, while Estonia and Hungary show comparatively lower gap rankings.
Policy discussion: rent control trade-offs
A dedicated section summarises evidence that rent control effects are context-dependent. Reported benefits include tenant stability and reduced displacement, neighbourhood stability, and improved affordability for low- and middle-income households in high-demand cities. Reported downsides include reduced supply and weaker incentives for new construction, deterioration of existing stock due to limited ability to recoup investments, and misallocation/black-market dynamics.
COVID-19 impacts (2020–2023): three channels
The paper describes the pandemic period through three interacting forces: (1) low interest rates that reduced borrowing costs and fuelled demand and price growth; (2) fiscal aid programmes that supported incomes and stabilised housing outcomes but highlighted differences in welfare capacity across countries; and (3) remote working, which gradually shifted demand away from high-density urban cores toward lower-density locations, raising prices where demand surged faster than supply could adjust.
Role of international financial institutions and CEB examples
International financial institutions are presented as important for closing housing gaps, with examples of CEB operations: loans supporting new and renovated social rental housing in German cities (including delivery of 3,411 rental units for nearly 9,000 beneficiaries and 708 crèche places in Leipzig), support for rental-based social housing and refugee-related housing assistance in Poland, planned lending for low-income housing access in Belgium, and technical assistance for Croatia’s National Housing Strategy.
Recommendations: priority intervention areas
Based on regional differences, the paper highlights priority areas such as creating and preserving dedicated affordable units; aligning supply with local market conditions (including reducing regulatory barriers); improving access to private-market housing for low-income households; and protecting against displacement and poor housing conditions, alongside complementary measures (e.g., digital infrastructure to support mobility and changing work patterns).