The European Union is advancing a fresh legislative effort to confront the continent’s deepening housing crisis. The European Commission’s proposed Affordable Housing Act aims to empower cities to curb escalating housing costs.
Across major European urban centers, housing affordability has deteriorated sharply since 2020. Since 2013, house prices across the EU have surged by more than 60 percent, while rents have climbed approximately 20 percent. In 2024, EU households devoted an average of 19 percent of their disposable income to housing, according to Eurostat.
Greece recorded the highest burden, with over a quarter of residents spending at least 40 percent of their disposable income on housing; the urban average stood at 29 percent. Denmark followed with an urban average of 22 percent. Conversely, Cyprus reported the lowest costs, with housing consuming just 2.6 percent of income.
The Affordable Housing Act (AHA) is designed to map areas experiencing “housing stress” and define when local authorities may intervene. Permitted measures include expanding affordable social housing, renovating existing stock, and making better use of vacant properties.
Short-Term Lets Under the Microscope
“The Affordable Housing Act is no half-measure,” says Sarah Coupechoux, head of the Europe Mission at the Foundation for Housing for Disadvantaged People. However, she warns that certain key provisions could prevent cities from acting swiftly when housing markets come under pressure.
Under the proposal, cities could restrict short-term rentals in areas officially designated as “under housing stress.” Yet they would first need to demonstrate that short-term rentals have seriously reduced housing supply over at least three years, and that lesser measures would be insufficient.
One of the most politically sensitive aspects of the crisis involves short-term rental platforms such as Airbnb. The platform, which serves leisure travelers globally, would be significantly affected by the EU Act. In a statement, Airbnb argued the legislation “will not add a single home to the long-term rental market, while adding regulatory uncertainty for hosts across European cities.” The company advocates for clearer rules distinguishing occasional hosts from large commercial operators.
Coupechoux also questioned the proposal’s affordability threshold. An area would typically qualify only if average home prices reach at least eight times local incomes—a ratio that has risen for a decade. In practice, a city where residents earn an average of €30,000 annually would only qualify if homes sell for an average of €240,000 or more. That benchmark, she argues, could exclude cities already under serious strain.
Local authorities across Europe share these reservations. The Council of European Municipalities and Regions (CEMR) welcomed clearer legal frameworks but contended that housing affordability cannot be measured by price-to-income ratios alone. It insists local authorities must retain the freedom to determine solutions suited to their specific contexts.
Focus on Young Renters
Youth and student organizations are pushing for more ambitious provisions. CESI Youth, the youth wing of the European Confederation of Independent Trade Unions, welcomed the emphasis on building social and affordable housing, investment, and tackling short-term rentals. However, it stresses that young tenants “need stronger protection against rent increases and evictions.”
The European Students’ Union wants students recognized as a “priority group” in stressed housing areas. It calls for more publicly funded student housing, protection from the impact of short-term rentals, and an EU-wide guarantor scheme to lower upfront rental costs.
In France, an initiative launched this month by real estate organizations I Loge You, FNAIM, and Cohabilis encourages owners with spare rooms to offer “intergenerational accommodation” to students. The groups note the average French student now pays €637 monthly in rent, while move-in costs exceed €1,600.
For Coupechoux, the long-term solution lies in expanding public and social housing. “Housing must be supported with public funds and preserved as a long-term asset,” she said. Regarding Airbnb and similar platforms, she added that while they should not be banned, “a fair balance” must be struck between tourism and the needs of people seeking a home.
