Filenews 21 December 2025 - by Maria Psara
A social living crisis that is now "hitting" not only low incomes, but also more and more middle-income households. Workers in basic services, such as teachers, nurses, firefighters and police officers, are unable to live in the communities they serve. Young people are forced to postpone studies, work or family, while the risks of homelessness increase.
The numbers of the housing crisis in Europe are "stunning". Since 2013, house prices in the EU have increased by more than 60%, outpacing income growth and leaving many families behind, while real rents have increased by around 20%, with new rents rising even more in the markets.
Housing demand is expected to increase by more than two million units per year, mainly in urban areas, but building permits have fallen by more than 20% since 2021.
The European Commission seems to have realised that the housing crisis is a European issue that requires European responses. Last week, the Commission unveiled its first package of housing measures, taking action to address one of its citizens' most pressing needs.
The aim of the Commission's proposals is affordable housing and the way to do this is for the EU to focus on addressing the root causes of the housing crisis, supporting safe, affordable and decent housing for all Europeans.
"Ensuring adequate housing is available requires long-term investment. As regards competition policy, the revision of State aid rules makes it easier for public authorities to invest in social and affordable housing," said Executive Vice-President for a clean, fair and competitive transition Teresa Ribera.
Ribera, as well as Danish Commissioner for Energy and Housing Dan Jörensen, the first with this portfolio, played a key role in this proposal that opens a huge chapter in the Commission's social approach. Coming from socialist governments, they both supported the political priority of their political group in the negotiations for the formation of the Commission.
What the Commission proposes
Normally, housing is a very decentralised policy - the primary responsibility lies with the Member States, the regions and the cities. However, according to the Commission, at the European level, "the EU can and must play a stronger role in supporting, coordinating and strengthening national, regional and local efforts, strengthening funding mechanisms, regulating short-term rentals and simplifying the rules that limit the supply of housing, while promoting the exchange of good practices."
One of the key issues identified by the Commission is that housing supply is not keeping pace with demand, especially in high-pressure urban areas. To close the supply-demand gap over the next decade, the European Commission estimates that the EU will need to add around 650,000 homes per year to current new supply levels (around 1.6 million per year). The delivery of these additional housing units will cost around €150 billion per year.
Commission experts explain that housing supply can take the form of building new homes, repurposing the use of existing buildings into housing and affordable housing, and renovating the existing housing stock to create more sustainable and quality housing.
The Commission is also looking at cutting red tape, both at EU level through a new housing simplification package and in cooperation with Member States, regions and cities to help them simplify building codes, administrative procedures for zoning, planning, permitting and increase their administrative capacity.
Another key problem weighing on housing is the impact of speculative behaviour on the housing market. Official government and statistical sources generally do not distinguish between different types of investments or between different types of investors, and there is limited transparency when it comes to property ownership and basic real estate transactions.
This is why the Commission will present in 2026 an analysis of house price dynamics, including available evidence on speculation patterns, data gaps and economic consequences, as well as proposals for follow-up actions, where appropriate. It will also work with public authorities to increase transparency in the housing market.
Short-term rentals are also in the crosshairs
An additional problem identified by the Commission concerns short-term rentals, which have increased by almost 93% between 2018 and 2024! Although the Commission is not yet legislating the issue, it is giving guidelines to member states and "promises" legislation in May 2026.
"The rapid growth of short-term rentals has contributed to limiting the provision of affordable housing for residents of the areas, especially in particularly popular destinations where they can account for up to 20% of the housing stock," the experts note, noting, however, that in general there are also benefits for citizens.
"There are concerns that short-term rentals, especially those managed by professional landlords, are competing with traditional accommodation providers, including SMEs, who need to comply with stricter national requirements, such as rules on safety, liability and consumer protection," the Commission admits.
"The Commission will therefore propose next year a new legislative initiative on short-term rentals, which will establish a coherent, data-driven, clear and predictable EU legal framework that will allow local authorities to take targeted and proportionate measures to address short-term rentals, especially in sectors facing housing problems."
Where will the money come from?
Under the current budget for 2021-2027, the EU is already mobilising significant funding for the renovation and construction of housing, for housing research projects and for the development of local projects. So far, it has mobilized at least €43 billion in housing-related investments. euros from the Recovery Fund, the European Social Fund and other sources.
However, new funding opportunities will be exploited in the next Multiannual Financial Framework 2028-2034. In particular, future national and regional partnership plans include social and affordable housing as one of their specific objectives, allowing Member States to address their specific challenges with housing-related investments and reforms. The EU Facility also contributes to social and affordable housing, while Erasmus+ can provide housing support to facilitate and increase access to mobility, volunteering and learning.
The European Competitiveness Fund includes social infrastructure such as 'affordable social housing' in its general objectives and supports the decarbonisation of buildings.
In addition, by revising the State aid rules on services of general economic interest, the Commission is responding to requests from local, regional and national authorities and stakeholders to review State aid rules to facilitate the financing of affordable housing.
Finally, the Commission is setting up an EU-wide investment platform to mobilise resources from a broad coalition of financiers and increase investment in the housing supply across the EU. The Commission stresses that regional development banks intend to invest €375 billion in resources by 2029 in social, affordable and sustainable housing, including through the InvestEU programme. Similarly, the EIB Group has significantly increased – and intends to further expand – its support.
