Over the past ten years, rising housing costs and rental prices across the EU have placed increasing pressure on household finances, intensified overcrowding, and altered housing and employment decisions.
Europe faces a housing crisis: since 2010, the average price of homes sold in the EU has increased by 55.4% while rents have climbed 26.7%, exceeding income growth for many demographics.
By the end of 2025, the European Commission estimated that housing prices in Portugal are overvalued by approximately 25% compared to their fair market value, «outstripping other property markets» within the union.
This situation disproportionately affects young people, notably those aged 18 to 29, who are more prone to falling behind on housing and utility payments, according to a recent Eurofound report, an organization dedicated to enhancing living and working conditions.
Young adults frequently prefer living in urban centers due to the concentration of job opportunities there, where the imbalance between housing demand and supply is especially severe.
«Young Europeans encounter this crisis during a critical stage of life, compelling many to accept living arrangements they might otherwise avoid, such as residing with parents or relatives,» the report highlighted.
However, this often results in overcrowded housing as individuals struggle to secure affordable accommodation independently.
In 2024, the highest rates of overcrowded homes were recorded in Romania (41%), Latvia (39%), and Bulgaria (34%), while Cyprus (2%), Malta (4%), and the Netherlands (5%) saw the lowest figures.
Meanwhile, young people living independently from their families spend a larger share of their income on housing and face a greater risk of being burdened by housing costs compared to other age groups.
Which EU countries are dedicating funds to housing?
In Bulgaria, Ireland, Poland, Portugal, Spain, as well as regions of Austria and Italy, rental affordability is so limited that in many locations, renting a typical two-room apartment demands more than 80% of the median wage.
Despite this, certain countries are channeling investments into housing to alleviate the severity of the crisis.
Eurostat data from 2024 shows that 5.3% of the EU’s GDP was allocated to housing investments.
Cyprus tops the EU list with 8% of its GDP invested in housing, trailed by Italy at 6.8% and Germany at 6.2%.
On the other hand, Poland invests the least, at just 2.2%. Latvia and Greece follow closely, allocating 2.5% and 2.6%, respectively.
Last year, the European Commission introduced the first-ever Affordable Housing Plan to address the housing challenges across the bloc.
This plan includes initiatives to detect speculative practices and promote equity within the residential housing sector.
The EU plans to mobilize at least €11.5 billion from its multiannual budget, supplementing €43 billion already dedicated to social, affordable, and sustainable housing. Additionally, national and regional development banks and institutions are projected to invest €375 billion by 2029.
Failing to meet housing preferences is linked to various adverse consequences.
These effects include difficulties in achieving independent living, hindered career choices, negative mental health outcomes, and postponement of starting a family.