An IM GlobalWealth.com News Report
The European Commission is set to unveil its first-ever Affordable Housing Plan this week, marking a notable expansion of Brussels’ role in addressing a housing affordability crisis that has intensified across much of the European Union. The initiative, led by Housing Commissioner Dan Jørgensen, reflects growing concern that rising housing costs are not only a social issue but an increasingly potent political one.
“The plan also addresses the impact of short-term rentals, particularly in heavily touristed cities (…) In some of the most strained neighbourhoods, short-term lets are estimated to account for up to 20% of housing stock”
Housing prices across the EU have surged over the past decade, far outpacing income growth in many member states. According to Eurostat, average house prices in the bloc rose by more than 50% between 2015 and 2024, while rents increased by approximately 25% over the same period. In high-pressure markets such as Portugal, the Netherlands, Spain and parts of Central Europe, affordability constraints have become a structural feature rather than a cyclical anomaly.
The social consequences are increasingly visible. Eurostat data show that around one in ten EU residents now live in households facing housing cost overburden, defined as spending more than 40% of disposable income on housing. Among younger adults, renters and low-income households, the proportion is materially higher, contributing to delayed household formation, labour immobility and widening intergenerational inequality.
“The Commission plans to enhance monitoring of speculative activity, although officials concede that translating data into binding regulation will be politically contentious”
“This is a real crisis,” Jørgensen said ahead of the plan’s approval, warning that sustained inaction risks deepening public discontent and feeding support for populist movements that have already made electoral gains by linking housing pressures to broader grievances over migration, tourism and economic fairness.
At the centre of the Commission’s proposal is a revision of EU state aid rules, designed to allow governments greater flexibility to deploy public funds for affordable housing beyond traditional social housing schemes. Until now, state support has largely been restricted to low-income households, despite mounting evidence that middle-income earners are increasingly priced out of urban housing markets.
The plan also addresses the impact of short-term rentals, particularly in heavily touristed cities such as Barcelona, Florence and Prague. In some of the most strained neighbourhoods, short-term lets are estimated to account for up to 20% of housing stock, tightening supply and placing upward pressure on rents. Rather than mandating bans, Brussels intends to provide local authorities with regulatory tools and improved data to manage the sector according to local conditions.
A further element focuses on the financialisation of housing. Policymakers acknowledge that residential property has increasingly been treated as an investment asset, with institutional and cross-border capital playing a larger role in several national markets. The Commission plans to enhance monitoring of speculative activity, although officials concede that translating data into binding regulation will be politically contentious.
Complementing these measures, Brussels will propose a construction strategy aimed at reducing red tape, harmonising standards and facilitating cross-border use of building materials. The objective is to ease supply constraints and improve cost efficiency without encroaching unduly on national competences.
While much of the package will consist of non-binding recommendations, Jørgensen framed the initiative as a political inflection point. Housing affordability, he argued, has become a test of whether mainstream institutions can respond to everyday economic pressures, or cede ground to those offering simpler, more divisive answers.
