The housing struggles of Europe's youth

Mary McCaughey: [00:00:35] Good afternoon and welcome to this edition of Eurofound Talks. This particular episode will discuss housing and Europe's youth. We've seen sale prices across the EU surge since 2010, and we’ve seen rents follow a parallel upward trajectory. In several Member States, prices have more than tripled. We are seeing this growth particularly in urban areas where employment is concentrated, which is causing its own set of difficulties, not least in terms of social cohesion.

[00:01:13] When we look at this in detail, it affects young people who are caught at home, unable to transition or move from one stage of their lives into the next. This has consequences: it delays independence and impacts the decisions young people make, which in itself affects how our societies develop. Housing is often treated at the European level as an isolated problem, but it has implications for so many other aspects of our lives, our economies, and our societies.

[00:01:55] As a result, the European Commission has, for the first time, appointed a dedicated Commissioner for Energy and Housing. The European Parliament has also been examining this through a housing committee at the EU level, and there are movements towards an affordable housing plan. There is a lot of work underway to address this issue and, hopefully, to make affordable housing a reality again.

[00:02:25] Joining me today is the person who knows most about this at Eurofound, Marie Hyland. She is one of the authors of our new report, Foundational Challenges: Housing Struggles of Europe’s Youth, which was published recently on our website. You’re very welcome, Marie.

Marie Hyland: [00:02:44] Thanks, Mary. I'm very glad to be here.

Mary McCaughey: [00:02:48] Marie, I’ve given an introduction to the crisis we’re facing. It’s very much in the media and the public debate, but can you lay it out for us? Can you provide a broad picture of housing and rental prices—how much they’ve increased and where?

Marie Hyland: [00:03:12] Yeah, absolutely, Mary. To start, it's important to emphasise that Europe is indeed experiencing a crisis of unaffordable housing. Since 2010, sales prices have increased by more than 55% and rental rates by 27%. However, these average statistics don’t show how severe the crisis is for certain groups and regions. As you mentioned, in some Member States, house prices have more than tripled over this period.

[00:03:41] There has also been an extremely uneven distribution of price increases across regions and degrees of urbanisation. In particular, the increase in housing costs in urban centres has far outpaced average trends. When we think about affordability, we have to remember that house prices and rental rates are only one part of the equation; we must consider housing costs relative to income levels. What is particularly problematic is that the relationship between house prices and income growth has really decoupled in metropolitan areas in recent years. For many young people, incomes have not kept pace with rising prices.

[00:04:19] There is also an important limitation in how this is captured in official statistics. The EU tracks affordability partly through a metric known as the "housing cost overburden rate." While we are aware of the crisis on the ground, this statistic suggests the rate of overburden has actually been trending downwards over the past decade.

Mary McCaughey: [00:04:52] Explain that to me.

Marie Hyland: [00:04:54] Well, on average, because incomes have been rising for some groups, certain people are actually faring quite well. But it’s vital to look beyond the average to see which regions and groups have been unable to keep up. This is why we decided to drill down and look specifically at the situation facing young people. Our recent report also presents highly disaggregated spatial analysis to highlight where these problems are most acute.

Mary McCaughey: [00:05:35] Give me a benchmark. What proportion of disposable income do we assume people generally pay for housing?

Marie Hyland: [00:05:47] It’s a contentious issue, and there isn’t one single, widely accepted threshold. However, the official EU statistic for the housing cost overburden rate tracks the proportion of households spending more than 40% of their income on housing. By that metric, 40% is the threshold for being overburdened. A ratio of about 30%—or one-third of your disposable income—is generally considered the threshold for affordable housing.

Mary McCaughey: [00:06:23] And regarding this overburden rate, are we seeing statistics in the 60% or 70% range in different Member States?

Marie Hyland: [00:06:37] Indeed we are. In certain Member States, regions, and for some groups, we see figures far above the 40% threshold. It really depends on where you live and what sector you work in.

Mary McCaughey: [00:06:54] Why focus specifically on young people? Are older people not also suffering?

Marie Hyland: [00:07:11] Yes, recent research shows that older people, particularly those in the rental segment, are in an increasingly vulnerable situation. However, we focused on young people because the data showed they face a large array of challenges across four specific areas identified in the framework of our colleague, Hans Dubois: housing exclusion, housing insecurity, problematic housing costs, and housing inadequacy.

[00:08:23] Young people were found to be more vulnerable across all four types. They are also at a crucial period where they are transitioning into independent adulthood and making long-term decisions about education, careers, and family formation. If they can’t move forward, it has a ratifying impact not only on them but on society at large.

Mary McCaughey: [00:09:12] Is this focus the same across the European Union? In Ireland, it is a constant policy debate, but do we see these same challenges on a European scale?

Marie Hyland: [00:09:47] Housing systems vary significantly across Member States in terms of tenure, the size of the social housing sector, and policy landscapes. However, our research shows that in all Member States, there are vulnerable groups—those in low-income or precarious jobs, or those seeking education and employment in urban centres where affordability problems are most acute.

Mary McCaughey: [00:10:44] Is this only about supply—building more houses—or are there other market factors like short-term rentals or investment funds?

Marie Hyland: [00:11:21] There are important drivers on both the demand and supply sides. On the demand side, we have demographic changes, such as a growing population and increased life expectancy. While it’s positive that people are living in their homes longer, it places stress on the market if we don't build units to compensate. We’ve also seen a massive increase in single-person households.

[00:12:30] You see a mismatch between available housing and current requirements. There are many older people living in larger houses that are under-occupied, while younger people cannot access the housing types they need. This is a difficult policy issue because "right-sizing" is not always a viable option for people who want to stay connected to their communities.

[00:13:56] Furthermore, we’ve seen the "financialisation" of housing and the rise of short-term rentals, which price out vulnerable households. On the supply side, construction is constrained by land availability, zoning, and soaring costs for labour and materials. As of the end of 2025, the supply of new units was only about 50% of the actual demand.

Mary McCaughey: [00:15:46] Have we seen any Member States moving forward in a positive way to address this?

Marie Hyland: [00:16:21] Different governments are addressing it in various ways. At the EU level, the new Housing Task Force released an affordable housing plan at the end of last year. This includes forthcoming regulations on short-term rentals to help Member States better regulate the sector.

Mary McCaughey: [00:17:06] Your research also suggests young people live in poorer quality housing. What's behind this?

Marie Hyland: [00:17:51] It’s a case of "needs must." Young people take whatever they can afford, which often means dwellings with structural problems like rot, damp, or energy inefficiency. Eurofound research shows that investing in housing quality reduces energy poverty, helps reach climate goals, and leads to better physical and mental health outcomes.

Mary McCaughey: [00:18:51] This is not good news for the younger generation. What are the broader consequences of this crisis?

Marie Hyland: [00:19:29] It leads to rising inequality and the erosion of social cohesion. To understand the impact, we surveyed four Member States: Czechia, the Netherlands, Spain, and Sweden. We found a substantial gap between current and preferred living arrangements. Only 40% of young people living with parents would choose that arrangement if they had another option.

[00:20:52] Consequences include being unable to pursue career opportunities and delayed family formation, with many young people having fewer children than they would like due to housing constraints.

Mary McCaughey: [00:21:18] Is there a gender dimension to this?

Marie Hyland: [00:21:28] While household data makes it hard to disentangle, we know single parents—who are disproportionately women—face higher rates of overburden, housing insecurity, and financial strain. They are also more likely to live in poor-quality dwellings.

Mary McCaughey: We do have this European Affordable Housing Plan, which was unveiled in December 2025. We have a new Commissioner for Housing, Commissioner Jørgensen. There is more motivation and energy towards addressing this, but it seems to me that the approach required to deal with this crisis is very multidimensional. It is not just about increasing housing stock; there are so many other issues at play. Talk to me first about what you think is possible in terms of EU competence to actually address the issues, and then I’d like to dig a little deeper into the other policies that need to come into play for this to function effectively.

Marie Hyland: Absolutely. Housing, undoubtedly, is not an EU-level competency. The responsibility for housing policy rests with Member States, regional governments, and even cities. It is highly decentralised. However, the EU has very important levers at its disposal which it has already been using.

[00:23:36] The first to highlight is funding. The EU has already been significantly investing in housing through the Recovery and Resilience Facility, Cohesion Policy, and even the Horizon Europe programme. They have already invested €43 billion in housing, and under the new European Affordable Housing Plan, they plan to scale this up significantly. This includes working with the European Investment Bank to form the European Investment Platform, which will partner with banks and other institutions in Member States. So, financing is one critical area.

[00:24:13] Another area where the EU exerts policy influence is through State aid rules. The EU recently revised its State aid rules regarding "Services of General Economic Interest" (SGEI). To explain how this matters: up until this revision, Member States were generally not allowed to give direct funding to companies to invest in housing because of concerns around competition and unfair advantages.

[00:24:48] There was an exception for social housing for particularly vulnerable, low-income households. But because housing unaffordability has spread up the income distribution—now impacting middle-income households—the State aid rules have been revised. This gives Member States more flexibility to intervene directly in the market and provide housing for a larger cohort of the population.

[00:25:18] I also mentioned the new regulations around short-term rentals, which apply from May 2026. These will bring more transparency to the sector and help Member States understand the situation on the ground so they can intervene accordingly. Furthermore, the Commission is working to assess problems in the construction sector. Housing construction has been far below what is needed to keep pace with demand.

Mary McCaughey: Due to labour shortages?

Marie Hyland: Due to labour shortages, energy costs, and the fact that it has historically been a sector with low levels of innovation and productivity. The European Commission has introduced a new plan to boost competitiveness and innovation in construction to ultimately increase output and make the sector more able to meet growing demand.

Mary McCaughey: That brings us full circle to the multidimensional aspect. We’ve done other podcasts on labour shortages in construction and the job quality in that sector. What other policy dimensions do we need to trigger to ensure the housing crisis doesn't operate in isolation?

Marie Hyland: As I mentioned, housing costs are only one side of the affordability problem; the other is income. We must ensure people have an adequate income to meet their standard of living, which means having social protections in place.

[00:27:19] Then there is transport policy—ensuring new developments are well-connected to schools and employment. Housing must also be connected to essential services like childcare. We’ve also seen a shift during the pandemic where teleworking increased demand for housing outside urban centres. For some, this removed the need to live right by the workplace, but we must remember that not all workers—particularly the most vulnerable—can avail of teleworking.

Mary McCaughey: Exactly. That’s not going to apply to the six nurses who have to share an apartment and take shifts in their bedrooms just to live near the hospital. In terms of other aspects that would need to be considered, you talked earlier about wellbeing, health, and mental health. Is this also something that should be factored into an overarching housing approach? Because if the implications are that bad housing quality or inaccessible/unaffordable housing is having that kind of an impact on young people, should that be part of the overall plan?

Marie Hyland: The thinking around that could be this: if we tackle the problems, then hopefully once the situation is improved, the outcomes for people will improve. If we tackle supply shortages and the economic strain people are under because of housing costs, we would hopefully see positive impacts on their mental health and wellbeing also.

Mary McCaughey: Marie, it’s a very complex issue. It’s obviously one that's playing out across the European Union and at Member State level. There are different initiatives at play. At the EU level, we've seen things have elevated and they've been propelled into action more than previously. But if you, in your role as an expert, were to have a policymaker in front of you for three minutes in an elevator, what are the three things you would say are the priority to address this issue fully?

Marie Hyland: It’s a very difficult question because the situation we paint is a very challenging reality for many. If we were to focus on just three, I would say:

[00:30:14] First, focus on supply-side solutions rather than demand-side interventions. There's a broad range of policies, but they can be grouped into interventions to make housing more affordable for residents—like housing allowances or first-time buyer supports. While these buffer against poverty, research shows they can have knock-on effects by increasing the price of housing, leaving consumers no better off. Supply-side solutions, which aim to increase the stock of housing, are shown to be particularly impactful for low-income households and young people. In this regard, the existing stock has considerable untapped potential. Making even a proportion of vacant dwellings available would have an important impact. Renovating existing stock is also much more climate-friendly and sustainable than building new ones.

[00:31:47] Second, address the rental sector. Most Member States have policies to balance the interests of investors and residents—like rent regulations and tenant security. While important, we must think about who does not benefit: the "outsiders" who are newcomers to the market, often young people. If a market is too tightly regulated, mobility is low and young people can’t access it. We must consider the perspective of outsiders when regulating rental markets.

[00:32:51] Third, address the increasing number of homeless people. While it's hard to get comparable data disaggregated by age for all Member States, available data shows an increasing number of young people in cities experiencing homelessness. This includes particularly vulnerable groups, like those leaving the care system who turn 18 and can no longer access services. Policy intervention must tackle youth homelessness, specifically by scaling up "Housing First" policies which have been shown to be really impactful.

Mary McCaughey: Those are interesting recommendations. The issue of homelessness was something we discussed in detail in a previous podcast, and reviewing the regulation of the rental sector is clearly important. Finding a balance between supply and demand, and making vacant dwellings available, would also address the decentralisation of our cities—seeing lights go back on at night is something young people would find attractive.

[00:35:09] I think it’s fair to say, Marie, that we’ve just touched on many of the subjects today, but you have been a font of knowledge as always. Thank you very much for joining us. I know you’ll be making this research available to policymakers during the Cypriot and Irish presidencies and to the European Parliament. Housing is very much on the agenda.

[00:35:42] The work Eurofound is doing is available online. You can find the report Foundational Challenges: Housing Struggles of Europe’s Youth on our website, along with our various podcasts and our new housing dashboard, which allows you to play with the figures Marie alluded to today. You can compare different indicators and Member States to dig deeper. Please continue to follow us on Eurofound Talks via Spotify or social media, and subscribe to our monthly newsletter. Until next time, thanks for joining us.