In the last 15 years, average house prices in the EU have more than doubled, while incomes have not kept pace. The housing crisis has hit young adults in cities hardest: in some countries, they have to spend 80% of their median wage just to rent a two-bedroom apartment. This has forced many into living arrangements they would not otherwise choose, writes Marie Hyland, research officer at Eurofound and co-author of Eurofound's report on the housing struggles of Europe's youth.

By Marie Hyland

As highlighted by Eurofound’s recent report, Europe is facing an unprecedented housing affordability crisis, one that disproportionately impacts young people. As housing costs continue to outpace income growth, the dream of independent living is slipping further out of reach for many young people who are, as a result, living for longer in the parental home. The consequences are far-reaching, affecting opportunities for education, employment; decisions around fertility and relationships; as well mental health and well-being. Addressing this crisis is not just about bricks and mortar; it is about securing the future of Europe’s youth and, by extension, the continent’s social and economic stability.

The Scale of the Crisis

Since 2010, average house prices in the EU have surged by 55.4%, while rents have risen by 26.7%. These increases have far outpaced income growth for many groups, creating a gap that is particularly acute for young people. In some EU member states, house prices have more than tripled. Urban centres, where employment opportunities are concentrated, have seen the most dramatic increases in housing costs. For young people, this means that living independently is increasingly unaffordable—even for those in employment.

The situation is further exacerbated by the shift in housing from a basic need to an investment vehicle. Investors and corporations play a dominate role in many urban housing markets, leaving individuals and families competing for a limited supply of affordable homes. The European Commission has recognised the urgency of the issue, creating a dedicated portfolio for housing under Commissioner Dan Jørgensen, establishing the Housing Taskforce and launching the European Affordable Housing Plan. These developments signal a growing political will to address the crisis, but the road ahead remains challenging.

Who Is Most Affected?

Across a range of metrics, young adults are hit hardest by the housing crisis. They are more likely to experience housing insecurity, to be overburdened with housing costs and to live in poorer-quality or overcrowded dwellings compared to older cohorts. 

The housing crisis in Europe is also unevenly distributed across geographic areas—it is most acute in urban centres and tourist hotspots, where demand outstrips supply and prices are driven up by limited space and high demand. Indeed, cities are at the epicentre of the affordability crisis, and, across the EU, young adults are more likely to live in cities due to the concentration of job and education opportunities. In many member states, a young person on a median wage would struggle to find a property to rent or buy in urban areas. For example, in Bulgaria, Ireland, Poland, Portugal, and Spain, over 80% of a young person’s median wage would be required just to rent a standard two-room apartment in an urban centre. Moreover, the price per square metre is significantly higher for smaller properties, making downsizing an ineffective solution to the lack of affordably supply.

Evidence also shows that the crisis is reshaping household formation. Many young adults are staying in the parental home longer than they would prefer, delaying relationships, careers, and family formation. Survey data from Czechia, the Netherlands, Spain, and Sweden reveal a stark mismatch between young people’s preferred and actual living arrangements. Far more are living with friends, relatives, or parents than would choose to do so, while far fewer are living with partners or alone than wish to be. This mismatch is not just a personal inconvenience—it is linked to negative outcomes such as mental health struggles, career limitations, and delayed parenthood.

Policy Responses and Recommendations

A multifaceted approach is needed to tackle the housing crisis. Key recommendations include:

• Increasing Affordable Housing Supply: In tight housing markets, supply-side solutions—such as building more affordable starter homes—are more effective than demand-side measures such as supports for first-time property buyers. The existing stock of vacant and underused buildings offers considerable untapped potential to increase supply, albeit often requiring significant renovations.
• Regulating Rents and Tenure Security: Rent regulation and policies to increase tenure security must balance the needs of incumbent tenants with those of newcomers, particularly young people.
• Tenure Neutrality in Fiscal Policy: Governments should treat renting and owning equally in fiscal policies to avoid distorting the housing market.
• Youth Participation in Policymaking: Young people should be actively involved in shaping housing policies, including innovative concepts like collaborative housing.

Finally, it is important to avoid creating a fragmented policy landscape, where piecemeal measures conflict or overlap. Instead, a cohesive, long-term strategy is needed to address both the immediate and structural challenges of the housing crisis.

The housing crisis facing Europe’s youth is not insurmountable, but it requires urgent and coordinated action. Policymakers, civil society organisations, and the private sector must work together to increase the supply of affordable, quality housing.

Marie Hyland joined Eurofound as a research officer in the Social Policies unit in 2023. Her research focuses on issues related to housing, the social implications of the green transition and the socioeconomic situations of vulnerable groups. Prior to joining Eurofound, Marie spent several years as an economist at the World Bank, where her research covered women’s employment and economic empowerment, private sector development and the economics of climate change. Marie holds a PhD in Economics from Trinity College Dublin. During her PhD studies, she was a visiting Fulbright scholar at the University of Maryland.