Dan Jørgensen, EU Commissioner for Housing
The plan also includes tighter regulations for short-term rentals and construction incentives. Portugal is still the EU country with the most overvalued houses.
The European Commission has announced more details of its comprehensive plan to tackle the European Union’s growing housing crisis.
Since 2013, average house prices in the EU rose more than 60%while rents increased by around 20%, with much steeper rises in the main cities. Some Member States recorded increases of over 200%, while rent prices and energy costs also continued to rise.
The situation is aggravated by structural imbalances: Only 6% to 7% of the housing stock across the EU is social housing, around 20% of homes remain unoccupied and short-term rentals have increased by almost 70% between 2019 and 2024. Residential building permits have also declined by around 22% since 2011.
Add to pressure exerted through local accommodationwhich in some parts of the EU represents up to 20% of the housing stock, after having grown by more than 90% in the last 10 years.
In this context, the Commission’s plan aims to boost the supply of affordable housing through coordinated action at European, national and local level. Brussels estimates that Europe needs to build more than two million homes per year to satisfy demand, which corresponds to around 650,000 more than are currently built each year. To achieve this objective, an investment of approximately 153 billion euros per year would be necessary.
To support this goal, the European Commission is developing measures including the simplification and digitalization of licensing procedures, the introduction of digital construction records and a digital product passport from 2028and accelerating the harmonization of standards for innovative construction materials and methods. Research and pilot projects will also be supported under the New European Bauhaus initiative.
The plan also aims to combat housing shortages in cities and tourist destinations, where short term rentals and real estate speculation drove up prices. Under an Affordable Housing Act, scheduled for 2026, the European Commission will help authorities regulate short-term rentals in areas with high housing demand and promote structural reforms to stabilize local property markets.
Particular attention is paid to groups most affected by the crisis, including low-income families, young people and essential workers. The proposed measures include guarantee pilot projects for reduce or eliminate rental security depositssupport for students and trainees and renewed efforts to combat homelessness, as part of a broader EU anti-poverty strategy.
Investment is another fundamental pillar. More than 43 billion euros have already been mobilized for housing under the EU budget for 2021-2027, with a further €10 billion expected for 2026-2027 and up to €375 billion from partner financial institutions by 2029. State aid rules will also be simplified to make it easier for governments to support social and affordable housing.
Portugal has the most overvalued houses in the EU
The European Commission estimates that housing prices in Portugal are overvalued by 25%the highest current percentage in the European Union (EU), also being one of the worst countries in terms of variations in purchasing power.
“According to the most recent data available, house prices remained overvalued in several EU countries in the second half of 2025. The Commission estimates that the highest average overvaluation is seen in Portugal, at around 25%, outpacing other real estate markets”, says the community executive.
In a portrait of the EU’s housing crisis, which accompanies the proposed plan for affordable housing, the institution adds that “house price growth began to outpace income growth in 2016 and the gap between the two widened sharply”, with the biggest increases in the last decade “occurring in Portugal, Netherlands, Hungary, Luxembourg, Ireland, Czech Republic and Austria”.
Next steps include the first EU housing summit in 2026, which will launch a European Housing Allianceand new initiatives aimed at improving energy efficiency and reducing household energy bills, particularly for those facing energy poverty.
