EUROPE IS RUNNING OUT OF AFFORDABLE HOMES AND GOVERNMENTS ARE STRUGGLING TO KEEP PACE

Housing Europe’s latest report on the state of housing in the EU paints a bleak picture: demand for decent and adequately priced homes far exceeds the limited supply. Social housing waiting lists include millions of people in Europe’s major cities, with thousands living in homes that lack basic safety, comfort or hygiene. This is a crisis that cannot be addressed by market forces alone – it is a true test of political will and social commitment, writes Diana Yordanova, Communications Director at Housing Europe.

By Diana Yordanova

Demand for decent and adequately priced homes is surging, social housing waiting lists are swelling, and construction is stalling across the continent – this is the outcome of the State of Housing in Europe 2025 report, prepared by Housing Europe. Based in Brussels, the federation speaks on behalf of 43 000 public, cooperative and social housing providers that house people in 31 countries in Europe.

Thousands and thousands of homes needed

The gap between housing needs and delivery is now systemic, which highlights both social and political challenges. France requires 518 000 homes each year, including nearly 200 000 social units. Germany requires at least 400 000 annually, with 140 000 needed for social housing. The Netherlands projects a need of almost 1 million homes by 2031, and Sweden more than 500 000 by 2033. In practice, these targets are rarely met. Production often reaches only half of what is needed. Rising populations, new household formations, urbanisation and migration push demand upwards, while financing bottlenecks, rising construction costs and slow permitting stall supply. After overviewing housing systems in Europe for nearly 40 years, Housing Europe is sure that this is a crisis that cannot be addressed by market forces alone.

The human toll is visible in swelling housing waiting lists and inadequate accommodation. France has nearly 2.8 million people on social housing lists. Italy, Portugal and Germany’s major cities report hundreds of thousands more. In Czechia, 161 000 people live in substandard housing, including 45 000 who are roofless, and up to 1.3 million face energy poverty. Portugal has 130 000 families in inadequate housing, concentrated in urban areas and the Algarve. These figures point to both shortages and serious quality gaps in housing that affect our health, social cohesion and economic mobility.

Are we not already building enough?

On top of this, construction renovation and conversion rates are also faltering at a critical moment. Residential building across Europe is expected to hit a 10-year low in 2025. Escalating material costs, higher interest rates and tighter financing have forced developers to cancel or delay projects. Regulatory constraints in some countries, including caps on construction costs or restrictive rent-setting mechanisms, further limit providers’ ability to deliver new homes. Renovation, essential for climate goals, is uneven. Austria and France are advancing retrofits, while the Netherlands struggles with affordability and grid constraints. Denmark’s programme is politically secured but due for review in 2026. Germany, Ireland, Italy and Sweden face delays or scale-backs due to financial pressures.

That being said, in places where they are backed by their governments, social and cooperative housing providers are proving resilient. Dutch social housing associations delivered one third of all new housing completions in 2024. French social housing associations accounted for almost 30% of starts. Finland’s municipal companies produced one fifth of new supply. In Sweden, public and cooperative providers together build one in four homes. This counter-cyclical capacity shows that public, cooperative and social housing is not only necessary for social reasons but economic ones as well, as it stabilises markets during economic downturns and acts as a buffer against market volatility.

Homes full of … politics

Looking at policy reforms across Europe, they often seem to be a patchwork. Denmark, Ireland, Luxembourg, Portugal and Slovenia have strengthened regulatory frameworks, expanded stock or aligned programmes with climate targets. In contrast, Austria’s rent restrictions have reduced revenues for providers, Finland has dismantled long-standing institutions, France continues to cut social housing finances through rent reductions, and Italy still lacks a national housing plan. These inconsistencies highlight the political dimension of the crisis: housing delivery is closely tied to governance, policy prioritisation and public investment.

The EU plays a double role. Fiscal rules, Eurostat debt classifications and energy legislation often constrain investment, however, EU funds and European Investment Bank loans are vital for large-scale delivery. Providers of fair housing on the ground are calling for predictable long-term funding beyond 2026, conditionality and continuous support that is not impacted by elections and political tsunamis to ensure that investment produces affordable, sustainable housing rather than purely financial returns. Without such reforms, the growing financialisation of housing risks worsening inequality, pricing families out of decent homes and leaving social providers financially overextended.

The upcoming European Affordable Housing Plan in mid-December, alongside the European Parliament’s work on social and cooperative housing, is a potential turning point. To succeed, however, it will require not only funding but also political recognition of housing as essential infrastructure.

Europe’s housing crisis is a true test of political will, governance and social commitment. Millions of families are waiting, and policymakers have little room for delay.

Diana Yordanova is the Communications Director of Housing Europe, leading its external and internal policy communications work, including the organisation’s online presence, press relations and event curation. She is the go-to person when it comes to the International Social Housing Festival, streamlining the federation’s messages, journalists’ queries and the monthly newsletter and social media channels.

Housing Europe, the European Federation of Public, Cooperative, and Social Housing, has been the voice of this sector since 1988. Representing 44 national and regional federations and 16 partner organisations across 31 countries, Housing Europe oversees around 25 million homes, accounting for approximately 11% of Europe’s housing stock. Through their network of over 43 000 local housing organisations, Housing Europe is the point of reference for stable housing models, innovation and research.