Why Has Buying a Home in Europe Become Unaffordable?

Every year, without fail, the same pattern emerges in Europe's housing statistics. Prices rise. Rents rise. Wages grow more slowly. And the number of families unable to afford a decent home increases with metronomic regularity. This is not a temporary market distortion or a cyclical anomaly. It is one of the most persistent structural imbalances in the European Union and understanding it is essential if we are serious about social cohesion on this continent.

Using data published by Eurostat in its Housing in Europe 2025 report and analyses from the European Parliament updated in March 2025, this deterioration can be traced with uncomfortable clarity.

The scale of the problem

The headline figure is stark. Between 2010 and 2024, house prices across the EU rose by 53% in nominal terms. The largest increases were recorded in Hungary (+231%), Estonia (+228%) and Lithuania (+179%). Only Italy and Cyprus saw prices stagnate or fall.

What is truly revealing, however, is the relationship between what a home costs and what citizens earn. By the end of 2024, house prices in the EU were approximately 55% higher than in 2015, compared to a 49% growth in net household income per capita over the same period. The gap appears narrow in percentage terms but accumulated over a decade it is decisive for any family attempting to access ownership.

On average in 2024, EU households spent 19% of their disposable income on housing. That figure, however, conceals a brutal asymmetrical: for those at risk of poverty, earning below 60% of the national median, the share rises to 37%. For those above that threshold, it stands at 16%. Housing does not weigh equally on everyone.

Table 1.  Key housing indicators, 2024. Source: Eurostat, Housing in Europe 2025.

Country	Price change 2010–2024	Housing cost (% income)	Overcrowding	Cannot heat home
EU average	+53%	19%	17%	9%

The anatomy of the crisis

The causes of Europe's housing affordability problem are multiple and interlocking. No single factor can fully explain it, which is precisely what makes it so difficult to resolve.

• Supply is not keeping pace with demand.  The European Investment Bank estimated that the EU needed 2.25 million additional housing units in 2025, roughly 50% more than the number of homes being built. Projections by the Joint Research Centre show that by 2035, more than two million new homes per year will be needed to meet demand, a target far beyond current construction rates.

• Building has also become far more expensive.  Between 2010 and 2024, construction costs in the EU rose by 56%, outpacing the general consumer price index, which grew by 39% over the same period. Not only is too little being built — building has become progressively more costly.

• Rents are following their own relentless trajectory.  Between 2010 and the first quarter of 2025, rental prices rose by 27.8% on average across the EU. The largest increases were recorded in Estonia (+220%), Lithuania (+184%), Hungary (+124%) and Ireland (+115%). Only Greece registered a net decline in rents, though its affordability crisis manifests through other equally severe channels.

• Short-term rental platforms are compressing local markets.  In 2024, 854 million guest nights were booked through major platforms: Airbnb, Booking, Tripadvisor and Expedia. Although short-term rentals represent just 1.2% of the EU's total housing stock, in certain neighbourhoods of tourist cities their share can reach 20% of all available dwellings, squeezing residential supply precisely where the pressure is greatest.

• Interest rates have reshaped who can buy.  After the sharp tightening cycle from 2022 onwards, household borrowing capacity contracted in numerous countries. By the end of 2023, house prices were still estimated to be overvalued in three-quarters of EU member states. The modest price correction for that year was insufficient to compensate for the surge in mortgage costs.

Who bears the heaviest burden

The aggregate figures obscure the most important story: the crisis is not evenly distributed. Low-income households absorb a disproportionate share of the damage, more than 27% of them face the highest levels of housing cost overburden and severe housing deprivation. Rather than acting as a social equaliser, housing in the EU is actively amplifying pre-existing inequality.

Younger generations are being structurally excluded. Those under 35 have not only seen lower real incomes than previous generations at the same age but have also experienced a declining home-ownership ratio. For millions of young Europeans, ownership has shifted from a life milestone to a statistical improbability.

The urban poor face the sharpest edges of the crisis. In 2024, housing costs exceeded 40% of disposable income for almost 10% of households in EU cities and 6.3% of those in rural areas. In Greece, that figure reaches 29% of the urban population, nearly one in three city dwellers spending more than 40% of their income on shelter.

A paradox worth examining

One of the most counterintuitive features of Europe's housing landscape is the relationship between homeownership rates and actual housing security. Countries with lower ownership rates, Germany and Austria, where rental markets are deep, regulated and culturally embedded, tend to offer greater stability than countries where ownership exceeds 90% of households.

In Romania, Slovakia, Hungary and Croatia, rental markets remain relatively small or informal, particularly outside major cities, a direct legacy of the mass privatisation of public housing stock during the 1990s. Very high ownership rates, it turns out, do not guarantee housing security.

Are we making progress?

The political response has been notable in its symbolism, if not yet in its scale. Following the 2024 European elections, Commission President Ursula von der Leyen identified housing as one of the EU's social priorities and nominated Dan Jørgensen as the first ever EU Commissioner dedicated exclusively to housing. The European Parliament established a special committee in 2025 to analyse root causes and propose remedies.

In 2025, the Commission and the European Investment Bank announced an action plan to deploy around €10 billion over two years, targeting new construction, renovation of existing stock, and innovation in building technology. Whether these measures are commensurate with the challenge is a different question. The EU needs more than two million new homes per year by 2035. It is currently building roughly half that number. Ten billion euros, spread across 27 member states and two years, amounts to a gesture of intent, not a structural correction.

What could change?

Eliminating all tension from the EU housing market is probably not achievable. Demography, internal migration and the economic concentration of opportunity in cities will continue generating pressure on supply. But the current scale of the crisis reflects policy choices as much as market forces.

Accelerating the construction of affordable housing, regulating the impact of short-term rental platforms on local markets, improving the energy efficiency of the existing stock, and ensuring that European funds genuinely reach the most vulnerable households are all measures whose effectiveness is well documented and whose implementation depends on political will — not on any discovery still pending.

Thirty million Europeans live in overcrowded homes. Nine per cent cannot heat them. In the most pressured cities, nearly a third of the population spends more than 40% of their income simply to keep a roof overhead. The data is there, year after year, in every Eurostat bulletin. The question is whether European institutions will treat it with the urgency it deserves.

Sources

• Eurostat, Housing in Europe — 2025 edition, Luxembourg, November 2024.

• European Parliament, Housing crisis: why prices are rising and what the EU is doing about it, Brussels, March 2025.