Housing Crisis in Europe. What can the EU do to solve it?

The housing crisis in Europe has escalated to a prominent position on the EU policy agenda, prompting urgent discussions and interventions at the highest political levels. The Austrian Federal Chamber of Labour (AK EUROPA), the publisher of this document, emphasizes the significance of the issue through its commitment to social justice and labor rights. While the document does not mention specific authors, it reflects a collective concern regarding the housing market's impact on European citizens.

Inflation has rendered housing one of the most pressing issues for many Europeans. Rent and property prices have been on a continuous rise, outpacing wage growth, which forces an increasing number of individuals to allocate a larger portion of their income toward housing expenses. Recent Eurobarometer surveys indicate that rising living costs were a key motivation for voters in the 2024 European elections. In response, EU Commissioner Ursula von der Leyen has prioritized housing as a distinct policy area, acknowledging its critical social implications.

The EU's new housing policy centers around the first European plan for affordable housing, which emphasizes investments in accessible and sustainable housing. A pan-European investment platform is planned in cooperation with the European Investment Bank (EIB) to attract both private and public investments. Key strategies include enhancing cohesion funding for affordable housing and relaxing state aid rules to facilitate increased public investment. However, challenges remain regarding how member states can secure the necessary co-financing under restrictive EU fiscal rules.

The EU's ambitious housing initiatives face significant hurdles, particularly due to labor shortages in the construction industry. The current business model relies heavily on precarious, low-cost labor, which is unsustainable for long-term growth. To revitalize the sector, improvements in job quality and stronger social protections are essential. Changing public procurement practices to prioritize social and environmental criteria could also help transform the construction landscape, which is currently plagued by price pressures and a lack of transparency.

The European Trade Union Confederation (ETUC) has actively addressed the housing crisis through comprehensive resolutions that highlight the rising costs and inadequate housing quality affecting many citizens. The ETUC attributes the crisis more to the financialization of the housing market than to supply-demand imbalances, advocating for increased state intervention and investment to ensure adequate and affordable housing.

The housing crisis disproportionately impacts vulnerable populations, with over one million individuals in Europe currently experiencing homelessness, including approximately 400,000 children. Effective strategies to combat homelessness must include preventing evictions and securing housing. The Housing First approach, successfully implemented in Finland, is gaining traction as a holistic solution that emphasizes the importance of stable housing as a prerequisite for addressing broader social issues.

A significant revival of public or social housing is deemed necessary to mitigate the ongoing housing crisis and homelessness. The European Economic and Social Committee (EESC) recommends supporting national initiatives and promoting best practices across member states. Innovative models, such as Austria's non-profit housing system, could serve as valuable examples to combat speculative construction that fails to meet actual demand.

As the EU embarks on these ambitious housing policies, including the formation of a Special Committee on Housing in the European Parliament, the focus will be on assessing member states' housing strategies and addressing property speculation. The collective effort at the EU level marks an essential step toward achieving sustainable and equitable housing solutions for all European citizens.