The European Housing Affordability Plan: What Can We Expect?

The European Housing Affordability Plan: What Can We Expect?

The European Affordable Housing Plan (EAHP) was released by the Special Committee on the Housing Crisis in Europe (HOUS) following a year of public consultations and years of challenging housing market conditions in the EU. Published by the Atlas Institute for International Affairs, authored by Keir Dolan, the plan aims to address the ongoing housing affordability crisis impacting approximately 1 million homeless individuals across the EU. The plan focuses on low housing supply, growing energy poverty, and regulatory constraints that limit participation from both private and public sectors in affordable housing projects.

One of the primary challenges identified is the lack of a universally accepted definition of affordable housing, which complicates the delivery of support across the EU. Current estimates suggest a gap of 925,000 housing units needed by 2025. Moreover, the construction sector has been slow to innovate, with only 1 in 4 firms adopting new technologies. The EAHP aims to modernize the construction sector by funding digitalization and supporting innovative construction practices, such as the SOFTacademy model in Estonia, which utilizes modular components to enhance efficiency.

Regulatory frameworks surrounding land use, zoning laws, and energy requirements pose significant barriers to increased construction activity. The HOUS committee is advocating for reforms in land policy to increase housing supply, as approximately 75% of the EU population lives in cities where housing costs are particularly high. Currently, only 3% of land in the EU is designated for residential housing. Changes in zoning laws to allow for higher-density housing could help utilize limited space more effectively.

Many of the EU’s homes, built before 1980, are energy inefficient, contributing to energy poverty among vulnerable groups. The plan seeks to renovate aging housing stocks to improve energy efficiency while also addressing climate goals. However, renovation activity has been minimal, with only 1% of EU buildings renovated between 2016 to 2020. The HOUS committee recognizes the need for extensive financing to support renovation efforts and aims to encourage private sector activity in addressing the challenges posed by energy inefficiency.

To bridge the investment gap of approximately €150 billion per year needed to meet housing demand, the EAHP outlines the necessity of targeted EU financing. Current funding initiatives, like the Resilience and Recovery Fund (RRF) and InvestEU Fund, aim to mobilize significant investment into affordable and social housing. However, distributional concerns exist, as Member States with well-established programs receive a disproportionate amount of support, leaving other nations facing severe housing shortages.

Looking ahead, the EAHP is an evolving initiative that requires continuous adaptation to effectively tackle the housing crisis. It emphasizes modernizing construction, driving regulatory reform, and facilitating financing for affordable housing projects. The upcoming Housing Summit and Housing Alliance events will provide further insights into the plan’s implementation. In the face of rising demand and declining living standards, the effectiveness of this ambitious plan remains to be seen.