Housing in the EU: more than 2 million new homes per year needed by 2035 to meet demand

Owning a home has gradually become more difficult since Europe’s financial crisis of the 2010’s, further deteriorating after the pandemic. House prices in the EU grew faster than income: at the end of 2024, they were about 55% higher than in 2015, compared to 49% growth of net household income per capita in the same period. In 2024, the cost of housing, water and energy made up 23.6% of all household expenditure.

To respond to the ensuing widespread public concern, the European Commission today published a European Affordable Housing Plan. JRC support of the strategy includes research on investment needs in housing by 2035, on area-specific factors associated with housing prices, and on the relation between intergenerational gap in housing affordability, income and demographic change. It also includes the New European Bauhaus, which champions research, skills and innovation to design and deliver affordable, sustainable and quality housing solutions for all.

How to meet future housing demands?

Ensuring housing affordability requires, among other, assessing the investment needs and understanding evolving demand. The most acute housing shortages are seen in urban areas and in specific high-demand regions with strong economic performance or significant touristic activity.

Projections for the period 2025-2035 calculated by the JRC and the Commission’s Directorate-General for Economic and Financial Affairs show that by 2035, more than 2 million new homes per year are needed to meet demand. This means that by 2035, in addition to the 17.06 million housing units already planned, 7.14 million dwellings will be needed.

These 7.14 million dwellings include:

the cumulative shortfalls from inadequate construction between 2010 and 2024 in regions with persistent housing shortages,
new housing demands arising from projected demographic shifts during 2025–2035
replacement and amortisation requirements over the same period, adjusted for anticipated construction levels in those regions with expected shortages.

The related additional annual investment need amounts to about €150 billion, summing up to a total cost of €1.68 trillion by 2035. The analysis is published in the brief Housing investment needs in the EU.

Major cities and capital regions are expected to face the strongest future housing pressures, reflecting sustained population growth, urbanisation trends, and limited land availability. Overall, housing needs in the top 30 metropolitan areas account for 35.5% of the total expected EU housing needs.

High housing needs are also projected in many coastal and touristic regions, which are already characterised by dense settlement patterns. New construction is a key component to addressing future housing demand, particularly in high-growth areas.

What’s common for areas with higher housing prices?

Municipalities with high transport and digital accessibility, high share of working age population, declining household sizes, employment and income are all positively and significantly associated with higher housing prices, a JRC brief on the territorial factors of housing prices in Europe shows.

Prices are also higher in cities and municipalities near the coast and high prices in one area can have a spillover effect on a neighbouring area.

Short term rentals: unlikely EU-wide impact, but significant local variations

In 2024, 854 million guest-nights were booked through major online platforms (Airbnb, Booking, Tripadvisor, and Expedia), marking a significant rise compared to pre-pandemic levels, according to Eurostat.

But, despite the rapid growth in online booking of short-term rental guest-nights, short term rentals are a relatively small fraction of the EU’s overall housing stock, representing 1.2% of total dwellings in the EU, with rural areas slightly higher at 1.5%, according to the brief. These proportions vary in touristic destinations (both coastal and rural) and in specific neighbourhoods of some EU cities, where the share of short-term rentals can be as much as 20% of the dwelling stock.

Young Europeans are being priced out

Younger generations, especially those below the age of 35 have seen not only lower real‑income compared with the previous generation at the same age, but also a decline in home‑ownership ratio, according to the JRC Science‑for‑Policy report Intergenerational fairness in the EU: income and housing dynamics in the context of demographic change.

When comparing generations at the same age, 30-year-olds born in the 1980s were 6.7 percentage points less likely to own a home than 30-year-olds born in the 1970s, and 5.5 points less likely than those born in the 1960s.

In addition, leaving the parental home has become increasingly delayed: among 30-year-olds, the 1980s generation was notably more likely to still live with their parents than earlier cohorts. Rising mortgage rates and tighter lending rules made it harder for young adults and first-time buyers to secure a foothold.

The proportion of tenants in the newest generations has increased, and tenants face higher cost-overburden rates, with many spending more than 30% of their disposable income on rent; a pressure that is particularly acute in cities. Such constraints can carry demographic consequences, reflected in trends such as delayed establishing of a household and delayed childbearing, while the widening wealth gap continues to threaten long-term social cohesion.

Details

Publication date: 16 December 2025
Author: Joint Research Centre

JRC portfolios 2025-27

Democracy and public governance