The European Parliament has taken a historic step: for the first time, it has approved a report on the housing crisis that sets out a roadmap for progress toward decent, sustainable and affordable housing throughout the European Union.
The housing market in Europe is broken. Since 2010, purchase prices have risen by more than 60% and rents by around 30%. Meanwhile, many families spend nearly 40% of their income on housing. To put this into perspective, the down payment for an average home in a city like Madrid can amount to three or four years of average full-time wages. This is simply unaffordable.
For this reason, Parliament adopted the report, calling for less red tape, lower taxes for housing, stronger support for low- and middle-income families, and enabling solutions to deliver homes where they are most needed.
This article is part of The Parliament's special policy report "Addressing Europe's housing crisis"
Housing crisis is a supply crisis
How did we get here? This story stems from the bursting of the real estate bubble. After the financial crisis, the sector was plunged into a storm that combined a lack of financing, a decline in skilled labor and a collapse in investment. Moreover, increasingly complex urban planning and environmental regulatory frameworks were not accompanied by sufficient incentives, administrative simplification or legal certainty.
The result has been a structural bottleneck: less land available, longer construction times, delays in the granting of building permits, higher costs and a supply unable to meet growing demand in European cities. This imbalance between supply and demand has been building for more than a decade. Estimates point to a deficit of around 10 million homes across the continent and, if we do not act, this figure will grow by 1 million units each year.
We have accumulated layers of regulations that have ended up creating a stifling system. Several years often pass between the design of a project and the laying of the first brick.
From scarcity to abundance
If housing is a priority for European governments, regardless of their political leanings, they must abandon the logic of managing scarcity and take on the challenge of generating abundance. We need to build and renovate. Above all, we need to allow building and renovation to take place.
This means reducing administrative burdens, digitizing procedures and setting targets, such as digital permitting procedures or delivering housing permits within 60 days. It requires promoting a new Housing Simplification Package that speeds up projects while preserving quality standards.
We also urge a comprehensive regulatory audit to identify EU legislation that may unintentionally hinder housing supply by assessing how requirements under the Energy Performance of Buildings Directive or the Energy Efficiency Directive affect construction and renovation costs.
This transformation must be accompanied by a coherent fiscal policy. Exploring the application of a super-reduced VAT rate to the construction and renovation of social housing would help alleviate costs and stimulate new supply.
Similarly, a key pillar of a strategy to stimulate supply involves strategically mobilizing available European funds, strengthening the role of the European Investment Bank and facilitating public-private partnership frameworks that multiply the impact of investment. But none of these measures will work if we fail to safeguard financial stability, as required by the Stability and Growth Pact.
It is time for real commitment. Parliament has identified regulatory obstacles and defined concrete priorities. It is now up to member states to translate this roadmap into reforms aligned with the European Commission's Affordable Housing Plan, which has incorporated essential objectives we have long advocated, such as promoting simplification, mobilizing investment and streamlining permitting procedures to increase supply.
Together, these initiatives create a coherent framework to increase supply, protect property and restore access to housing for young people and families. We have laid the foundations. It is time to build the structure.
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