The European Union has taken an unprecedented step to confront a mounting social and economic emergency, unveiling its first-ever dedicated housing strategy. This move comes as a generation of young Europeans finds itself increasingly shut out of affordable living, a crisis experts warn is fuelling political instability and undermining the bloc's future.
The Scale of the Crisis: A Generation Priced Out
The statistics paint a stark picture of a continent in the grip of a severe affordability crisis. Since 2010, average house sale prices across the EU have skyrocketed by nearly 60%. In nations like the Netherlands, prices have doubled within a single decade. The rental market offers little respite, with average rents climbing by almost 30% over the past 15 years. These figures mask extreme surges in countries such as Estonia (208%), Lithuania (177%), Ireland (108%), and Hungary (107%).
New research from the EU agency Eurofound reveals the profound impact on younger citizens. A staggering 30% of 25- to 34-year-olds in the EU still live with their parents, a rate that jumps to almost 50% in Spain, Portugal, Ireland, and Poland. For those who do rent independently, housing costs are crippling, consuming almost one-third of their income on average. In several countries, including Ireland, Poland, Portugal, Spain, and Bulgaria, a young worker can expect to spend over 80% of their wage on a modest two-room flat.
Root Causes and Wider Consequences
While post-pandemic construction costs have played a role, analysts point to a deeper, structural driver: the "financialisation" of housing. This trend, dating to the 1980s, sees homes primarily as investment assets to generate profit rather than as a fundamental human right. Consequently, many governments have retreated from direct social housing provision, and home ownership rates have plummeted even in traditionally property-owning cultures.
The fallout extends far beyond individual hardship. The crisis acts as a drag on the wider economy, with employers unable to attract workers to booming cities where housing is most expensive. Essential public services are being undermined as key workers are priced out. Phil Ní Sheaghdha of the Irish Congress of Trade Unions highlighted the acute problem in healthcare, noting the reliance on non-EU staff who arrive to find "no place to live, or if they do, that 70% of their wages... is going to be spent on rent."
This inequality is creating fertile ground for political extremism. As Barcelona mayor Jaume Collboni has warned, housing now poses a threat to the EU on par with major geopolitical risks, with far-right parties exploiting narratives of zero-sum competition for scarce resources between migrants and locals.
The EU's Response: A First Step or Too Little?
In response, the European Commission's new strategy aims to give national governments more flexibility to subsidise affordable housing, targeting the "missing middle" – those who earn too much for social housing but too little to buy or rent privately. It also takes aim at the short-term rental market, with planned legislation by the end of 2026 that could allow authorities in areas of "housing stress" to impose limits.
However, the strategy has drawn criticism for what it lacks. Calls from Mayor Collboni and others for a massive €300bn annual fund, akin to Covid-era recovery finance, to directly build affordable homes have been ignored. The plan also stops short of radical measures to curb property speculation.
The ultimate power remains with national governments, who now face mounting pressure to disrupt the asset-based model and reinvest in social housing on a scale not seen since the post-war era. The EU's entry into this policy arena signals a belated recognition of the crisis's severity. Whether this first strategy is a sufficient tool to defuse what experts call Europe's political timebomb, and rescue a generation from housing precarity, remains the critical unanswered question.
