EU Policymakers Slow to Act Over Housing Frustrations in 2025

Housing has become a major challenge for EU policymakers as soaring prices and persistent supply shortages fuel civil unrest across the bloc. In 2024, mass protests erupted over the cost-of-living crisis and housing affordability, with demonstrators taking to the streets in Portugal, Ireland, the Netherlands, Germany, and Spain. Protesters blame market speculation, immigration, overtourism, and foreign investment for absorbing the limited housing supply.

In response, the European Economic and Social Committee (EESC) will launch a specialized subdivision in 2025 to address the crisis (European Parliament, 2024). However, meaningful policy changes at the EU level will take time, making further unrest likely in 2025. Without a coordinated pan-European response, domestic policymakers face an escalating crisis that demands immediate intervention.

Housing Affordability Sparks Political Shifts

A unified EU response remains difficult, as the bloc lacks a mandate to enforce housing policies at the national level. While sovereign states implement the EU’s strategic agenda, they do so on their own terms. Additionally, the varied socio-economic, political, and cultural landscapes of each country make it challenging to craft policies that have a uniform impact across the bloc—particularly in housing.

In January 2025, Spanish Prime Minister Pedro Sánchez outlined a 12-step plan to address housing affordability at a forum in Madrid. His proposal includes reforms to development and land laws to expedite construction. The transfer of vacant housing to a new public entity—the Public Housing Company—to increase Spain’s public housing stock from just 2.5% of total supply. And 100% tax on foreign buyers of Spanish property to curb speculative investment (La Moncloa, 2025).

While Spain’s approach may be feasible within its borders, similar reforms would be difficult to implement in countries like Norway or Slovakia, where local economic and social conditions differ significantly. However, the entire bloc shares a common trend of rapidly rising house prices, exacerbating the affordability crisis.

Between 2015 and 2023, house prices across the EU increased by an average of 48% (Eurostat, 2025). Spain aligns with this average, but some countries—such as Hungary and Portugal—have experienced exceptional growth, with prices soaring by 173% and 106%, respectively (Figure 1). This surge disproportionately affects vulnerable socio-economic groups, particularly younger generations, who face rising inflation, high interest rates, and severe supply shortages.

Rising Unrest and Political Implications: Spain as a Case Study

Mounting public anger over housing affordability has fueled shifts in political dynamics. Growing social unrest is reshaping voter behavior, complicating efforts to implement a unified EU-level response. The rise of far-right and populist parties, such as Alternative für Deutschland (AfD) in Germany and Rassemblement National (RN) in France, has added to the challenge. These parties generally oppose EU-wide initiatives, preferring nationalist policies—such as stricter immigration controls and reduced government intervention—which undermine broader efforts to address the crisis.

Spain illustrates these tensions. In March 2024, the Catalan government introduced price controls to regulate housing costs and assist local buyers. However, the move resulted in an immediate 13% drop in available housing stock that same month (Idealista, 2024), tightening supply further and intensifying price pressures.

While rising property values benefit asset owners and investors, reports of illegal occupations and squatting have surged in early 2025 as tenants struggle with evictions and soaring costs in major cities such as Barcelona and Madrid (Euronews, 2025; Idealista, 2025). With local governments scrambling to contain the crisis, political instability has raised concerns about future market risks.

Looking Ahead: Overburden Rates and Market Prospects

Housing remains a highly complex issue with no simple solution. While political leaders frequently pledge reforms, the credibility of these promises remains uncertain. The EU only formally recognized housing affordability as a key priority in 2022, following increasing public pressure (Euronews, 2024). Moreover, there is no universal definition of what constitutes “affordable housing.”

The EU primarily relies on the housing cost-to-income ratio, or overburden rate, to assess affordability.

Defined by Eurostat as the percentage of the population spending more than 40% of disposable income on housing after housing allowances, overburden rates serve as a critical policy metric. In 2023, one in ten households in European cities—including Barcelona and Madrid—spent over 40% of their income on housing (Figure 2). Such high costs continue to fuel local discontent, increasing pressure on policymakers.

In response, the EESC’s first housing forum in late 2024 proposed measures to address market failure, including, regulatory reform for land and housing development, ecognizing housing as a fundamental right in EU law and providing 0% interest loans from the European Investment Bank for social housing projects (EESC, 2024).

However, the timeline for implementing these policies remains uncertain, and their impact on local markets is unclear. In the meantime, local and national governments—such as the Sánchez administration—are taking more immediate action by transferring public housing stock and restricting purchases to local buyers.

Conclusion

Despite significant investment hurdles, the shift toward supply-side housing policies presents opportunities for public-private partnerships. One emerging area is digitalization, where AI and automation could streamline development and planning—identified as a key priority in a study by the EESC’s housing subdivision (Kulesa et al., 2024). Additionally, regulatory reforms aimed at reducing bureaucracy could accelerate housing development.

In the short term, rents and housing prices are expected to remain under pressure, particularly in urban areas where supply constraints are most acute. While social unrest is likely to continue, new opportunities are emerging for market players. The key areas to watch are the digitalization and AI-driven housing development, inclusive social and urban planning, decentralizing decision-making to local governments and community-driven housing solutions.

The EU’s New European Bauhaus (NEB) initiative is expected to play a central role in shaping future housing policies over the medium-to-long term.

References

EESC (2024) Social housing in the EU – decent, sustainable and affordable, Key Points from EESC (592) Plenary. Available at: https://www.eesc.europa.eu/en/our-work/opinions-information-reports/opinions/social-housing-eu-decent-sustainable-and-affordable (Accessed: 24 February 2025).

Euronews (2024) Von der Leyen promised an EU commissioner to tackle the housing crisis – what would be their remit? Available at: https://www.euronews.com/my-europe/2024/08/13/von-der-leyen-promised-an-eu-commissioner-to-tackle-the-housing-crisis-what-would-be-its-r (Accessed: 18 February 2025).

Euronews (2025) Fresh Anger in 2025 as protesters in Barcelona angry at evictions and high rental rates, euronews. Available at: https://www.euronews.com/my-europe/2025/01/31/protesters-in-barcelona-angry-at-evictions-and-high-rental-rates (Accessed: 18 February 2025).

European Parliament (2024) New EP committees to work on security and defence, health, democracy, housing | News. Available at: https://www.europarl.europa.eu/news/en/press-room/20241216IPR25996/new-ep-committees-to-work-on-security-and-defence-health-democracy-housing (Accessed: 11 February 2025).

Eurostat (2025) ‘House price index (2015 = 100) – annual data’. Available at: https://doi.org/10.2908/PRC_HPI_A.

Idealista (2024) The permanent rental stock in Catalonia drops 13% after price controls — idealista/news. Available at: https://www.idealista.com/en/news/property-for-rent-in-spain/2024/04/26/816612-the-stock-of-permanent-rentals-in-catalonia-falls-by-13-after-the-entry-into (Accessed: 20 February 2025).

Idealista (2025) Squatting and rising household costs top housing concerns for Spaniards. Available at: https://www.idealista.com/en/news/property-for-sale-in-spain/2025/02/13/831132-squatting-and-household-expenses-are-the-main-housing-concerns-for-spaniards (Accessed: 21 February 2025).

Kulesa, A. et al. (2024) ‘Affordable Sustainable Housing in the EU’, in. The European Economic and Social Committee (EESC), CASE – Center for Social and Economic Research. Available at: https://doi.org/10.2864/4150397.

La Moncloa (2025) The President announces 12 new measures to strengthen the right to affordable housing, La Moncloa. Available at: https://www.lamoncloa.gob.es/lang/en/presidente/news/Paginas/2025/20250113-housing-forum.aspx (Accessed: 13 February 2025).

Lory, G. and Hess, A. (2024) ‘European political landscape shifts right in 2024’, euronews, 24 December. Available at: https://www.euronews.com/my-europe/2024/12/24/european-political-landscape-shifts-right-in-2024-as-far-right-gains-ground (Accessed: 11 February 2025).