Forget Affordability. Europe Has an Availability Crisis

Across Europe, widespread talk of a “housing affordability crisis” has dominated headlines for years. But policymakers and economists are increasingly sounding a different alarm: the crisis is no longer just about steep costs — it’s about fundamental scarcity. Even if rents or prices could be tamed, there simply aren’t enough homes to meet demand, especially in major cities and booming regions. This availability crisis — where supply falls far short of population needs — is now reshaping urban life, labour markets, and social cohesion across the continent.

Beyond High Prices: The Heart of the Problem

The traditional narrative of a housing crisis focuses on soaring prices: rents that climb faster than incomes, mortgages that stretch budgets, and long waiting lists for social housing. Yet while affordability remains a serious concern, experts argue that focusing only on price obscures a deeper issue. The most acute problem Europe faces today is that there simply aren’t enough homes to go around. �

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Across the European Union, housing construction has lagged far behind what’s needed. According to recent research, the EU would need to build more than 2 million new homes per year until 2035 just to meet demand — a target that current construction levels fall far short of. � With new household formation rising faster than new housing completions, shortages are intensifying in both urban and suburban markets.

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In cities like Berlin, London, Paris and Geneva, rental markets are tightening dramatically, with vacancy rates near historic lows and average rents climbing steadily. In a survey of 59 European cities, rents rose in 48 of them, while overcrowded living conditions increased as well. �

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What’s Driving the Availability Crisis?

Several structural forces have converged to shrink Europe’s housing stock relative to demand:

1. Persistent Underbuilding

Post‑pandemic economic shifts, higher construction costs, labour shortages, and regulatory barriers have all dampened housing construction. Many European countries are not producing new units fast enough to replace aging stock or accommodate population growth. Even in markets with vibrant demand, developers face high interest rates and slow permit processes, reducing incentives to build. �

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2. Urbanisation and Population Growth

Urban centres remain magnets for young workers, students and migrants. As more people gravitate toward cities for jobs and opportunities, desirable metropolitan regions are experiencing disproportionate supply shortages. This mismatch between supply and demographic trends has pushed housing availability to the brink.

3. Short‑Term Rentals and Tourism Pressure

In many European cities, residential housing has increasingly been diverted into short‑term rental markets through platforms like Airbnb. While this has boosted tourism, it has further shrunk the stock of homes available to long‑term residents and families. This dual use of housing — residential versus tourist accommodation — has become a flashpoint in debates from Barcelona to Amsterdam. �

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4. Speculation and Investment Purchases

Property markets across Europe have attracted domestic and foreign investor interest. In some cities, this speculative demand has pulled available dwellings off the market for owner‑occupiers and long‑term renters alike, leaving fewer homes for families and young professionals.

Social Fabric at Risk

An availability crisis isn’t just an economic issue — it affects social stability. When housing is scarce, competition increases, pushing even middle‑income households into precarious living situations. Young adults, key workers, and families with children often struggle the most, leading to extended stays with parents, delayed family formation, or migration out of high‑demand cities.

In Spain, where rents have surged as much as 80% over the past decade, protests erupted as citizens demanded protections from speculative markets and tourist pressures. � Meanwhile, in Greece, government efforts to expand social rent and social housing reflect how acute the need for basic shelter has become. �

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A lack of available homes also weakens labour mobility. Workers cannot relocate easily for jobs if housing near employment hubs is scarce, with long waiting lists for rentals or astronomical purchase prices limiting flexibility. These dynamics can slow economic growth and widen regional inequalities.

Forget Just “Affordability” — We Need More Homes

Many European policy responses have focused on controlling housing costs — through rent caps, subsidies, or payments to renters — but these measures alone cannot create the housing units that people need. Affordability and availability are linked, but a supply shortage will continue to put upward pressure on prices no matter how many subsidies or rent controls are introduced.

The European Commission’s newly introduced European Affordable Housing Plan aims to tackle multiple facets of this crisis, from boosting new construction and renovation efforts to addressing short‑term rentals in areas under housing stress. � Yet this kind of coordinated action is only a starting point in reversing decades of underinvestment.

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A Snapshot of the Crisis Across Europe

Here’s how the housing availability crunch looks across different parts of the continent:

Western European cities: Countries like France, Germany, and the Netherlands are experiencing fierce competition for rental stock. In some cities, demand outpaces listings so dramatically that hundreds of applicants pursue each new rental posting. �

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Southern Europe: Spain and Italy face persistent shortages, with social housing waiting lists and limited new builds struggling to keep up with demand. �

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Northern and Central Europe: Nations such as Ireland, Hungary, and Estonia have seen double‑digit price growth while rental markets tighten, reflecting broader supply gaps. �

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Even countries traditionally seen as housing success stories, like Austria with its strong municipal housing tradition, now see rising demand outstrip finely tuned systems.

Paths Forward: More Homes, More Equity

Addressing Europe’s housing availability crisis will require multi‑layered strategies:

Boosting Construction: Accelerating permit processes, incentivising builders, and investing in large‑scale housing projects can help expand supply more rapidly.

Rebalancing Ownership vs Rentals: Policies that support long‑term renting without dampening supply are essential, including protections for tenants and incentives for landlords who offer long leases.

Reining in Speculation: Coordinated regulation of investor purchases and short‑term rentals will help preserve homes for permanent residents.

Conclusion: A New Lens on Europe’s Housing Struggle

Too often, we hear that Europe’s housing crisis is primarily an affordability problem — that rents or prices alone are to blame. But affordability is a symptom of a deeper structural challenge: a lack of housing availability itself. Without a substantial increase in the number of homes and a policy shift toward expanding supply, millions of Europeans will continue to struggle for the most basic human need — a place to live. As this crisis deepens, it won’t just reshape markets but the very fabric of European societies.