Europe’s Housing Crisis: Young People Struggle Amid Rising Costs

Rising house prices and rents across the European Union have created a significant housing crisis affecting millions. Since 2010, average house sale prices in the EU have surged by 55.4%, while rents have climbed 26.7%. This trend has outpaced income growth, leading to increased financial strain on households and altering living and career choices.

The European Commission projects that by the end of 2025, housing prices in Portugal will be overvalued by 25%, the highest in the EU. Young people, particularly those aged 18 to 29, are disproportionately impacted. A recent report by Eurofound highlights that this demographic is more likely to struggle with housing costs and utility payments. Many young individuals seek accommodation in urban centers, where job opportunities are concentrated, but these areas also face severe housing shortages.

According to the Eurofound report, “Europe’s young people are facing this crisis at a pivotal life stage, forcing many into living arrangements they would not otherwise choose, such as living with parents or relatives.” This trend often results in overcrowded conditions, as affordable housing options become increasingly scarce. In 2024, the highest rates of overcrowded homes were reported in Romania (41%), Latvia (39%), and Bulgaria (34%). In contrast, Cyprus (2%), Malta (4%), and the Netherlands (5%) had the lowest rates.

The situation remains challenging even for those young people who manage to live independently. They are spending a significant portion of their income on housing, often exceeding the affordability thresholds compared to older age groups. In some regions, the rental market is so unaffordable that more than 80% of the median wage is required to rent a standard two-room apartment. Countries like Bulgaria, Ireland, Poland, Portugal, and Spain face some of the most severe challenges in this regard.

Investment in Housing Solutions

Despite the crisis, some EU countries are taking steps to address the housing shortage. In 2024, the EU invested 5.3% of its GDP in housing, with Cyprus leading at 8% of its GDP. Following Cyprus, Italy invested 6.8% and Germany 6.2%. Conversely, Poland lagged behind with only 2.2%, along with Latvia and Greece at 2.5% and 2.6%, respectively.

In response to the ongoing housing crisis, the European Commission introduced the first-ever Affordable Housing Plan. This initiative aims to address speculative behavior and promote fairness in the residential market. The EU anticipates mobilizing at least €11.5 billion from its multiannual budget, complementing the €43 billion already committed to social, affordable, and sustainable housing. Additionally, national and regional banks are expected to invest €375 billion by 2029.

The consequences of unmet housing needs are serious. They can hinder independent living, limit career opportunities, negatively affect mental health, and lead to delays in starting families. As Europe grapples with these challenges, the urgency for effective solutions to the housing crisis continues to grow.