Executive summary
Background and methodology
Housing scarcity has become one of Europe’s most pressing social challenges, as it undermines social inclusion, economic stability, and environmental sustainability. It does so while limiting people’s access to decent, sustainable, and affordable living conditions essential for well-being and equal opportunities across the EU.
The EU has increasingly acknowledged the need for coordinated action to tackle these issues. The European Parliament resolution of 21 January 2021 on Access to decent and affordable housing for all (2020/2844(RSP)) laid the groundwork for stronger EU-level engagement. More recent developments signal a growing political commitment to housing at the EU level, including the appointment of the first-ever European Commissioner for Housing, the announcement of an EU Affordable Housing Plan, and the establishment of the European Parliament Special Committee on the Housing Crisis in the EU (HOUS).
Against this background, this study examines housing needs across the EU, focusing on inequalities in housing affordability, accessibility, and quality. It provides a mapping of the current housing needs in the EU across territories and population groups. The study analyses key factors affecting housing demand and supply challenges, and the impacts of housing scarcity on health, education and employment. It also reviews how EU legislation and funding shape and support national policies in the area of decent, sustainable and affordable housing. The analysis is based on a combination of research methods, integrating desk-based analysis, examination of quantitative data, stakeholder consultations, and selected case studies for illustration.
Key findings of the study
Housing is broadly recognised as a fundamental human right encompassing security of tenure, adequate living conditions, affordability relative to household income, and compliance with environmental and energy efficiency standards. Thus, decent, sustainable, and affordable housing represent three interconnected dimensions essential for EU housing policy, yet how these concepts are defined and operationalised varies across the EU.
The study highlights major disparities in housing conditions and access. Southern and Eastern Europe face high rates of overcrowding and deprivation, while Western and Northern Europe struggle with soaring prices and limited supply. Urban areas face acute shortages and escalating prices, while rural and outermost regions often contend with deteriorating housing and limited investment. Substandard, overcrowded, or unsafe housing continues to disproportionately affect vulnerable groups – low-income families, migrants, ethnic minorities, single parents (particularly women), young people, older persons, and persons with disabilities.
Persistent housing scarcity and rising costs affect physical and mental well-being, social inclusion, labour mobility, and educational outcomes. It also exacerbates inequalities across income levels, age groups, gender, and vulnerable populations.
Demographic and social trends, such as ageing populations, the rise of smaller households, urbanisation, delayed family formation among young adults, migration, and the rise of tourism-related short-term rentals, cause demand-side pressures. At the same time, the housing supply struggles to keep pace due to factors such as limited land availability, high construction costs, fragmented regulations, labour and skill shortages in the construction sector, and low sector productivity. Affecting both demand- and supply-side pressures, the financialisation of housing has become a major structural driver of affordability challenges. The growing role of institutional investors, real estate funds, and speculative investment has increasingly turned housing into a financial asset rather than a social good. This process has fuelled price inflation, reduced the availability of affordable rental housing, and limited access for first-time buyers.
EU legislation and funding mechanisms have contributed to improvements in housing quality. It has done so by setting targets and requirements for energy efficiency and use of renewable energy sources in residential buildings, and by providing funding for reforms and investments in energy efficiency of housing sector and the development of affordable housing. However, their impacts remain uneven due to differences in national transposition, administrative capacity, and financial resources.
Policy pointers
To address housing scarcity, reduce inequalities, and ensure that all residents can access secure, adequate, and climate-resilient housing, it is recommended that the EU and its Member States (MS) act across three mutually reinforcing pillars: (1) legislation and standards; (2) finance and investment; (3) enabling capacity, data and public support. The following actions are ways to make housing policy more affordable, inclusive and ready for implementation:
1) Strengthen EU legislation and standards for impact
- Embed social goals in climate-related building policy.
The implementation of the EPBD could require National Long-Term Renovation Strategies to include measurable social targets (e.g. low-income households reached) and tenant safeguards during renovations.
- Clarify and update State aid rules for affordable housing.
Update the services of general economic interest (SGEI) Decision to widen eligibility (i.e. to also include moderate-income households, key workers and young people) and raise thresholds. This would enable MS to scale social and cost-rental programmes and to use land and subsidy tools without legal uncertainty.
- Promote tenant rights and security.
Develop initiatives to strengthen tenant rights as part of its social policy agenda under Principle 19 of the European Pillar of Social Rights. While tenancy law remains a national competence, elements such as transparency of rental contracts, fairness of eviction procedures, and access to basic housing services could be guided by EU principles.
2) Mobilise funding and investment at scale
- Expand the European Affordable Housing Initiative.
Under InvestEU and with the European Investment Bank, further expand the European Affordable Housing Initiative by creating dedicated financing windows (including guarantees) on its pan-European Investment Platform for social and affordable new-builds and renovations, with clear affordability and energy-efficiency benchmarks.
- Strategically use Cohesion Policy, the Recovery and Resilience Facility (RRF) and the Social Climate Fund (SCF).
Encourage programme allocations to energy-efficient social/affordable housing, regeneration in deprived areas, and rental supply near jobs—across cities, small towns and rural areas to support territorial cohesion. Prioritise SCF support that cuts bills for vulnerable households, reducing energy poverty.
- Innovate with financing models.
Promote revolving housing funds, social bonds and land-value capture; provide technical assistance (e.g. Advisory Hub) to help MS set them up and crowd-in private capital for public-interest outcomes.
- Align fiscal incentives.
Encourage MS to control and disincentivise speculation and vacancy (e.g. second-home, vacancy and STR taxation) and reward affordable supply (e.g. tax credits, reduced VAT for social/affordable construction).
3) Drive enabling measures for effective implementation
- Build local capacity and improve governance.
Use the Technical Support Instrument, European Urban Initiative and URBACT to level up municipal capabilities (e.g. planning, land mobilisation, digital permitting, community engagement). Share replicable models of participatory planning and co-designing.
- Strengthen data, monitoring and definitions.
Establish an EU Housing Data Hub (Eurostat with relevant DGs), harmonising core indicators (e.g. affordability, homelessness, social housing stock, rents, energy performance), including disaggregation by degree of urbanisation and available demographic groups. Agree on an operational EU definition of “affordable housing” anchored in income and local costs. Create an EU Building Performance Observatory to track the renovation performance gap.
- Foster public support and inclusive governance.
Co-design solutions with tenants, housing associations and local communities; communicate the triple benefits of affordability, quality and decarbonisation. Spotlight proven models to build confidence and political will (e.g. Housing First in Helsinki, brownfield renovations in Freiburg – read more on these case studies in Part 2: Annexes[1]).
- Sustain research and knowledge exchange.
Fund applied research on short-term rental impacts, climate adaptation costs, and effective public and private partnerships; re-energise the Urban Agenda Housing Partnership as a standing platform for implementation guidance.
[1] Part 2: Annexes, including Annex I. Case studies is available at: https://www.europarl.europa.eu/RegData/etudes/STUD/2025/759352/CASP_STU(2025)759352(ANN01)_EN.pdf
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