The Financialization of Housing in Europe - My Home is an Asset Class

The document “The Financialization of Housing in Europe – My Home is an Asset Class” is a policy‑focused study published by The Greens/EFA in January 2022. It is authored by Daniela Gabor and Sebastian Kohl, researchers who specialize in European housing policy and financial markets. The analysis draws on data from private provider Preqin, European regulatory texts, and a range of academic sources to examine how institutional investors have reshaped residential housing across the EU.

Over the past decade, institutional owners—including private‑equity funds, pension funds, insurance companies, sovereign wealth funds and large real‑estate firms—have acquired roughly €40 billion of Berlin’s housing stock, a figure that dwarfs the combined value of institutional holdings in London and Amsterdam. Preqin data from August 2021 show more than 4 000 institutional investors managing €136 trillion of assets globally, with €3.6 trillion directed at European real‑estate. Of these, 1 325 investors (holding €44 trillion) own residential assets, and Blackstone alone managed €730 billion, of which €230 billion was allocated to real‑estate.

The influx of institutional capital has coincided with a sharp rise in house prices and a decline in rental yields. Studies cited in the report indicate that financialisation has not increased home‑ownership rates or housing supply, but has amplified price inflation and reduced affordability, especially for low‑income households in major cities. Over‑burden rates—where housing costs exceed 40 % of disposable income—have risen markedly for poorer tenants across Europe.

European legislation has progressively eased capital requirements for institutional investors in housing. The Capital Markets Union, Solvency II for insurers, and the IORP II framework for pension funds provide regulatory relief that encourages investment in residential assets. Specific measures include lower risk‑weightings for covered bonds, preferential treatment for “Simple, Transparent and Standardised” (STS) mortgage‑backed securities, and reduced capital charges for long‑term equity holdings.

The authors propose a three‑pronged reform agenda:

1. Sustainable Institutional Housing Framework – Introduce a social‑taxonomy “Housing” pillar that requires mandatory disclosure of availability, accessibility, acceptability and quality (AAAQ) metrics, and creates high‑, struggling‑ and poor‑performance buckets.
2. European Housing Fund – Establish a public fund to act as a counter‑cyclical buyer of distressed housing, finance social‑housing construction, and provide a stable investment vehicle aligned with the high‑performance taxonomy bucket.
3. Housing Red‑Flag Rule – Mandate that new EU‑level regulatory initiatives be screened to prevent unintended de‑risking of housing asset classes for institutional landlords.

• PDF size: 5 MB; PDF link provided for full text.
• Last edited: 5 May 2026 12:36 PM.
• Status: Public; website https://www.greens‑efa.eu/opinions/who‑really‑owns‑your‑city/.
• Database submission: 26 Nov 2025 4:13 PM; website submission confirmed.
• Institutional ownership accounts for roughly 30 % of €2.7 trillion EU‑wide real‑estate assets (private‑equity funds) and 20 % held by listed REITs and property companies (2020).
• Insurance companies and pension funds together hold about €500 billion in European real‑estate, with insurers contributing €217 billion (2.7 % of their overall €8 trillion portfolio).

The report highlights divergent national approaches: Germany and Denmark favour covered‑bond markets, while the UK and Southern European states rely more on securitisation. Recent EU initiatives—such as the STS regime (2019) and the revision of Solvency II (2023)—have further lowered capital costs for residential mortgage‑backed securities, reinforcing the profitability of institutional housing investments.

For a pan‑European audience focused on sustainability, the study underscores that financialisation poses systemic risks to housing affordability and social equity. The proposed social‑taxonomy and European Housing Fund aim to align institutional capital with human‑rights‑based housing standards, ensuring that investment flows support, rather than undermine, sustainable and inclusive urban development.