Addressing an imminent housing crisis is as difficult as it is necessary. Which segment needs European intervention most? And how does a 27-member union address an issue that afflicts each of its members differently?
Across the European Union, a shortage of adequate housing has become a deepening challenge, both social and economic. As EU Perspectives has reported, house prices in the EU have risen by more than 60 percent over the past decade, while rents are on average 20 percent higher today than in 2015. Moreover, the only conceivable remedy—building more—has stalled. Since 2021, the number of building permits has dropped by around 20 percent, further tightening supply.
That is why, for the first time in its history, the European Commission is presenting a comprehensive housing plan. With the launch of the EU Affordable Housing Plan, Brussels is stepping into a policy domain that had long been reserved to the member states.
Until now, public support for housing construction was largely confined to social housing. Under the new framework, member states will be explicitly allowed to use public funds to support housing for middle-income households — a group that’s increasingly struggling to rent and buy houses.
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Change welcomed and feared
This change reflects a broader recognition that housing unaffordability is no longer limited to the most vulnerable. In countries like the Netherlands, the shortage is particularly acute in the so-called “middle segment.” MEP Brigitte van den Berg (D66/NLD), a member of the European Parliament’s housing committee, has welcomed the reform as “long overdue”.
The Dutch housing association umbrella group Aedes underlined that. The group’s chair, Liesbeth Spies said: “This decision fulfills a long-standing wish of the housing sector. It increases the investment capacity of housing associations and makes it possible to build around 5,000 additional mid-market rental homes per year. This EU decision is, above all, good news for people looking for a home. Housing associations will now be able to build more mid-market rental housing, which improves mobility within the housing market and strengthens the resilience of neighbourhoods.”
At the same time, concerns remain that expanding support for middle-income housing could dilute already scarce resources for social housing, though the Commission insists that the two objectives are complementary rather than competing.
National causes, European consequences
Apart from the obvious social dimension, the Commission now frames housing also as a matter of competitiveness, cohesion and democratic resilience across the Union. Housing Commissioner Dan Jørgensen has warned that failure to address the crisis risks “leaving a void that extremist forces will take,” turning housing insecurity into fertile ground for anti-democratic politics.
“Today marks an important moment. The European Commission has launched its first Affordable Housing Plan. Across the EU, people are struggling to find homes they can afford. This is no longer a local issue or a national one. An EU-wide housing crisis needs an EU-wide solution,” MEP Regina Doherty (EPP/IRL) said.
Strategies alone do not deliver housing solutions. — Jean-Christophe Repon, President of the European Builders Confederation
The underlying causes differ widely between and within member states. Yet, the effects are strikingly similar across the Union: rising rents and house prices, declining labour mobility, delayed family formation, and growing political frustration.
Tourism, the culprit
For example, in cities such as Amsterdam, Barcelona and Lisbon, platforms like Airbnb have contributed to removing housing stock from the long-term market, displacing residents such as teachers, nurses and police officers who need to live close to their work. Local authorities have responded with a patchwork of measures, ranging from caps on rental nights to licensing systems and outright bans in certain neighbourhoods.
The Commission now wants to reduce this fragmentation by proposing EU legislation that would give national, regional and local authorities clearer legal tools to regulate short-term rentals in areas experiencing ‘housing stress’. The aim is legal certainty: defining when restrictions are justified and proportionate under EU law.
At the same time, in some member states, short-term rental income has become an important supplement to household finances, particularly where pension systems are weak or inadequate. Overly rigid EU rules could therefore have unintended social consequences. The aforementioned proposed revision of EU state aid rules is, of course, less controversial.
Investment, permits, and capacity
Beyond state aid, the Affordable Housing Plan seeks to unlock investment. Together with the European Investment Bank and national banks, the Commission plans to mobilise public and private capital through a pan-European investment platform for social and affordable housing. Housing construction will also enjoy explicit embedding in national partnership plans under the EU’s next long-term budget (MFF).
Administrative complexity is another key target. Lengthy and opaque permitting procedures are a major obstacle to faster construction. The Commission plans to identify EU rules that unintentionally slow down permit processes and to simplify them where possible. A concrete legislative is likely in 2027.
Eurochambers, the association of European chambers of commerce and industry, welcomed this approach. “Simplification is a building block in the EU’s competitiveness – and the European affordable housing plan seems to follow this principle. Businesses need practical rules, faster permitting, and skilled worked to deliver housing at scale, its CEO, Ben Butter said.
The Commission is also linking housing affordability to construction capacity. The accompanying EU Strategy for Housing Construction recognises that Europe cannot build its way out of the crisis without a well -functioning, construction sector.
Jean-Christophe Repon, President of the European Builders Confederation (EBC) praised the Commission for acknowledging that housing is not only a social challenge but also an industrial one. However, he cautions that “strategies alone do not deliver housing solutions.” Success, he argues, will depend on whether EU measures genuinely strengthen local construction SMEs, simplify procedures and provide long-term, accessible financing. In other words: delivery will be local, or it will not happen at all.
