WEEKEND READ: Europe’s Great Housing Crisis: Why Buying a Home Is Becoming Impossible

BRUSSELS, 29 AUGUST 2026, 09:00 BST — EBM NEWS DESK ANALYSIS — By Nick Staunton

For millions of Europeans, buying a home is no longer simply difficult. It is becoming increasingly unrealistic.

Across Europe, house prices have risen dramatically faster than incomes, while rents have continued climbing and the supply of new homes has failed to keep pace with demand. What was once primarily a problem affecting London, Paris and other major capitals has become a continent-wide economic and political crisis.

The latest figures underline the scale of the problem. EU house prices rose by 5.5% in the year to the fourth quarter of 2025, while rents increased by 3.2%. Since 2015, house prices across the bloc have risen by almost 65%, with some countries experiencing increases that would have been almost unimaginable a generation ago.

Portugal has seen prices rise by around 180% since 2015, while Hungary, Lithuania and Bulgaria have also experienced extraordinary increases. Rents have risen in every EU country over the same period, with Ireland and Poland among those experiencing particularly sharp increases.

The result is a growing divide between those who already own property and those still trying to get onto the ladder.

Locked out

For younger Europeans, the traditional route into home ownership is breaking down.

High prices mean buyers need larger deposits, while higher interest rates have made mortgages significantly more expensive. Even where house prices have begun to stabilise, affordability has not necessarily improved because borrowing costs remain far above the ultra-low levels that helped fuel the previous property boom.

The problem is particularly severe in Europe’s major cities.

Workers are increasingly finding that they cannot afford to live anywhere near their jobs. Teachers, nurses, police officers and other essential workers are being pushed further from city centres, increasing commuting costs and placing additional pressure on transport networks.

In Ireland, housing shortages have become so severe that the European Commission has specifically highlighted the difficulties facing essential workers and younger people trying to establish independent lives.

Dublin remains one of Europe’s clearest examples of the problem. Demand continues to outstrip supply, rental availability remains tight and housing costs have become a significant economic issue rather than simply a social one.

But Dublin is far from alone.

Amsterdam, Lisbon, Paris, Madrid and many other European cities face similar pressures. A shortage of housing is colliding with population growth, changing household structures, international investment and the rapid expansion of short-term rentals.

The European Commission says short-term rentals increased by 93% between 2018 and 2024, while around 20% of homes across Europe remain unoccupied.

The supply problem

At the centre of the crisis is a simple economic problem: Europe has not built enough homes.

Planning restrictions, lengthy approval processes, rising construction costs and shortages of skilled workers have all limited the speed at which new housing can be delivered.

The European Commission estimates that the EU needs more than two million homes every year to meet current demand.

Yet building at that scale is easier said than done.

Developers face higher financing costs. Construction companies are dealing with expensive materials and labour shortages. Local authorities face pressure to protect communities and infrastructure while simultaneously being told to accelerate development.

Meanwhile, many existing homes are simply in the wrong places.

Europe has millions of underused or empty properties, yet the greatest shortages are concentrated in cities and economically successful regions where people actually want and need to live.

That mismatch is helping turn housing into one of Europe’s biggest constraints on economic growth.

Companies can create jobs, but workers need somewhere affordable to live.

A wider economic threat

Housing is increasingly becoming a competitiveness issue.

If talented young workers cannot afford to live in Europe’s most productive cities, businesses struggle to recruit. If workers spend an ever-larger proportion of their income on rent and mortgages, consumer spending elsewhere in the economy suffers.

The European Commission has now placed housing at the centre of its economic policy agenda, including dedicated housing analysis in the 2026 European Semester for the first time. It is urging governments to increase supply, simplify planning and permitting, reform taxation and expand investment in social and affordable housing.

Brussels has also mobilised tens of billions of euros towards housing-related investment and is preparing further action aimed at improving affordability.

But there is no quick fix.

Building enough homes takes years. Changing planning systems takes political courage. And attempts to control rents without simultaneously increasing supply can create further unintended consequences.

The Bigger Picture

Europe’s housing crisis is becoming one of the defining economic issues of the decade.

For homeowners, rapidly rising property values have created enormous wealth. For those locked outside the market, however, the same trend represents an increasingly difficult barrier to financial security.

That divide risks becoming generational.

A society in which property ownership depends increasingly on inheritance rather than income or hard work creates consequences that extend far beyond the housing market.

Europe’s leaders are finally recognising the scale of the problem. The real test is whether recognition can now be turned into enough new homes.

Because until supply begins catching up with demand, millions of Europeans will continue asking the same question:

If a decent job is no longer enough to afford a decent home, what exactly has gone wrong?