“According to the most recent data available, housing prices remained overvalued in several EU countries in the second half of 2025. The Commission estimates that the highest average overvaluation is in Portugal, at around 25%, surpassing other real estate markets,” says the EU executive.

In a portrait of the EU housing crisis, accompanying the plan proposed today for affordable housing, the institution adds that “housing price growth began to outpace income growth in 2016 and the gap between the two has widened sharply,” with the largest increases in the last decade “occurring in Portugal, the Netherlands, Hungary, Luxembourg, Ireland, the Czech Republic and Austria.”

Affordable housing

The European Commission today presented the first EU-wide plan to promote affordable housing, which includes a strategy for housing construction (focusing on vacant homes and the renovation and conversion of buildings), the simplification of construction rules (such as permits) and the revision of state aid rules (making it easier for Member States to invest in affordable and social housing).

It also includes increased European funding (from the EU's long-term budget, cohesion, the InvestEU program, and the European Investment Bank), combating real estate speculation (with greater transparency in the sector), and a new law on local accommodation (with a legal framework for local authorities to act).

Furthermore, attention is given to young people, including students, who are among the groups most affected by the housing crisis, with measures to mobilize investment in university residences and to avoid excessive mortgage payments.

Cooperation structures will also be created, such as a Housing Alliance, involving Member States, mayors, and regional authorities, as well as market monitoring mechanisms.

New homes

Over the next 10 years, the EU will have to build approximately 650,000 new homes per year, implying a public and private investment of €150 billion annually.

The European Union faces a housing crisis in countries like Portugal, where house and rental prices have increased significantly, making it difficult to access affordable housing, especially for young people and low-income families. House prices in the EU have increased by an average of up to 60% since 2015, with some member states registering increases of over 200%, while rental prices and energy costs have also continued to rise.

However, residential building permits have decreased by about 22% since 2011.

Furthermore, pressure is exerted through short-term rentals, which in some EU locations account for up to 20% of the housing stock, after having grown by more than 90% in the last 10 years.