The European Union is making a new move to tackle the continent's housing crisis, with the European Commission’s Affordable Housing Act designed to authorise cities to curb soaring housing costs.

In many major European cities, housing affordability has deteriorated sharply since 2020. House prices across the European Union have risen by more than 60 percent since 2013, while rents have climbed by around 20 percent.

On average in 2024, EU households spent 19 percent of their disposable income on housing according Eurostat.

Greece recorded the highest housing costs, with more than a quarter of residents spending at least 40 percent of their disposable income on housing, with an average of 29 percent in cities, followed by Denmark where the average was 22 percent in cities.

Greece recorded the highest housing costs, with more than a quarter of residents spending at least 40 percent of their disposable income on housing, with an average of 29 percent in cities, followed by Denmark where the average was 22 percent in cities.

Cyprus reported the lowest costs, with people spending just 2.6 percent of their income on lodging. The EU’s Affordable Housing Act (AHA is aimed at mapping out areas experiencing “housing stress” and determining when local authorities can intervene.

The EU’s Affordable Housing Act (AHA is aimed at mapping out areas experiencing “housing stress” and determining when local authorities can intervene.

Measures they can take will include increasing affordable social housing, renovating existing buildings and making better use of empty properties.

Struggling to survive, Greece's Olympic villagers ponder referendum choice Short-term lets“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 worries that some of its key provisions could stop cities from acting quickly when their housing markets come under pressure. Under the proposal, cities could restrict short-term rentals in areas officially recognised as "under housing stress". But first they would have to prove that short-term rentals had seriously reduced the supply of homes over at least three years, and that lesser measures would not work just as well.

Paris hails success of tough rules for short-term lets on Airbnb One of the most politically sensitive elements of the crisis concerns short-term rentals such as those listed on Airbnb. The platform, which caters to leisure travellers worldwide, would be heavily affected by the EU Act.

Airbnb said in a statement the Act "will not add a single home to the long term rental market, while adding regulatory uncertainty for hosts across European cities".

It wants clearer rules that distinguish people who occasionally rent out their home from large commercial operators.

Coupechoux also questioned the proposal's affordability test. An area would normally qualify only if average home prices are at least eight times local incomes, and that ratio has been rising for a decade. In practice, that means a city where residents earn €30,000 a year on average would only qualify if homes there sell for an average of €240,000 or more. That bar, she said, could leave out cities that are already under serious pressure.

Local authorities across Europe share these concerns. The Council of European Municipalities and Regions (CEMR) said it welcomes clearer legal rules, but argued that housing affordability cannot be measured by comparing prices and incomes alone. It wants local authorities to be free to decide what works best for them locally. Focus on young renters Meanwhile, youth and student groups want the law to go further. CESI Youth, the youth wing of the European Confederation of Independent Trade Unions, welcomes the focus on building social and affordable housing, on investment and on tackling short-term rentals.

But it says young tenants “need stronger protection against rent increases and evictions".

The European Students' Union wants students to be treated as a “priority group” in areas under housing stress. It is calling for more publicly funded student housing, protection from the effects of short-term rentals, and an EU-wide guarantor scheme to reduce the upfront costs of renting.

In France, an initiative launched this month by real estate organisations I Loge You, FNAIM and Cohabilis is encouraging owners with spare rooms to offer "intergenerational accommodation" to students.

The groups say the average French student now pays €637 a month in rent, while the cost of moving into a new home exceeds €1,600.

For Coupechoux, however, the long-term answer lies in expanding public and social housing. “Housing must be supported with public funds and preserved as a long-term asset,” she said.

As for Airbnb and similar platforms, she added that while they should not be banned, “a fair balance” has to be found between tourism and the needs of people looking for a home.