A coordinated EU approach to housing

This document is a briefing from the European Parliamentary Research Service (EPRS) titled "A coordinated EU approach to housing." It was authored by Marketa Pape and published in May 2025.

The briefing was prepared for Members of the European Parliament to provide background information for their parliamentary work. It addresses the growing housing crisis across the European Union, which has been exacerbated by the recent cost-of-living crisis, and outlines the EU's current and potential role in tackling this issue.

Extensive Summary

The briefing details a long-standing and worsening problem with housing affordability throughout the EU. It highlights that rising construction costs, higher mortgage rates, and a slowdown in housing construction have made homeownership more difficult. Simultaneously, the treatment of housing as an investment vehicle has driven prices up faster than incomes. This has led to a significant and growing number of people struggling to find affordable housing, an increase in homelessness, and a rise in the housing cost overburden rate, where households spend over 40% of their income on housing.

The document also emphasizes the environmental challenge, noting that buildings are responsible for 40% of the EU's energy consumption and 36% of its CO2 emissions. Decarbonizing the housing stock through renovation is presented as essential for achieving the EU's climate goals and reducing energy poverty.

While acknowledging that housing is primarily a Member State responsibility, the briefing outlines how the EU indirectly influences housing through legislation, policy guidance, and significant funding. A key political development is the creation of a dedicated portfolio for Energy and Housing within the new European Commission, under Commissioner Dan Jørgensen, signaling a more coordinated EU-level approach.

Key Findings

The Scale of the Housing Crisis

• Between 2010 and 2023, average house prices in the EU increased by 48% and rents by 22%.
• Homelessness has risen by an estimated 70% over the past decade in Europe.
• The construction sector is expected to contract, and it faces significant labor and skills shortages.
• A growing number of citizens, not just low-income groups but also middle-income groups and key workers, are unable to afford housing at market conditions.

EU Policy and Legislative Impact

• Energy Efficiency: The revised Energy Performance of Buildings Directive (EPBD) is a central piece of legislation. It mandates that all new buildings be zero-emission by 2030 and sets targets for Member States to reduce the average energy use in residential buildings by 16% by 2030 and 20-22% by 2035, with a focus on renovating the worst-performing buildings.
• State Aid Rules: EU competition rules, specifically for Services of General Economic Interest (SGEI), regulate how Member States can subsidize social housing. The briefing notes that the current definition of the target group for social housing ("disadvantaged citizens or socially less advantaged groups") is considered by some stakeholders to be too narrow, hindering investment in affordable housing for a broader range of people in need.
• Public Procurement: EU directives encourage public authorities to award contracts based on the "most economically advantageous tender" (MEAT), which considers quality, environmental, and social aspects, rather than just the lowest price. However, the lowest-price criterion remains prevalent.
• Short-Term Rentals: New EU rules, applying from May 2026, aim to create more transparency in the short-term rental market by improving data collection, which will help local authorities develop better policies to manage their impact on housing availability and prices.

EU Funding and Initiatives

• Multiple EU funding instruments are available to support housing, with an estimated €100 billion available for energy efficiency renovations until 2030. Key sources include the Recovery and Resilience Facility (RRF), the European Regional Development Fund (ERDF), the InvestEU programme, and the new Social Climate Fund (starting in 2026).
• The European Investment Bank (EIB) is a significant financier for social and affordable housing and is planning to launch a new action plan and a one-stop-shop portal to support housing investment.
• Key initiatives include the European Platform on Combating Homelessness (EPOCH), which aims to end homelessness by 2030, and the Affordable Housing Initiative, which pilots innovative renovation projects.

• The European Commission is preparing a "European affordable housing plan" and has launched a call for evidence to gather input.
• The Commission has proposed amendments to cohesion policy funds to provide Member States with greater flexibility and financial incentives to reprogramme funds towards affordable housing projects.
• There is a strong political push from EU institutions, housing ministers, and stakeholders for a "European new deal for affordable and social housing," including calls to revise rules that may exacerbate the crisis and to increase investment in socially inclusive and sustainable housing.