Europe’s Housing Crisis- Denmark Leading the Way?

https://www.epc.eu/publication/europes-housing-crisis-denmark-leading-the-way/

As stated by European Commission President Ursula von der Leyen during her 2025 State of the Union address, housing is a key priority for her mandate. With housing prices up by 48% in the EU between 2010 and 2023 and 10.6% of the EU population unable to keep their homes adequately warm in 2023, Europe is undoubtedly facing an escalating housing crisis. Moreover, echoing the words of the president, housing is also a social crisis, affecting quality of life, while exacerbating social and economic inequalities.  

The von der Leyen-II Commission has placed housing higher on the agenda with two key initiatives: the Housing Task Force, designed to improved coordination across relevant parts of the Commission, and the Affordable Housing Dialogue, launched in 2025, which will prepare the EU’s first European Affordable Housing Plan (EAHP) expected in early 2026. The European Investment Bank (EIB) is set to play a central role with a 10 billion pan-European investment platform. 

The European Parliament has created a Special Committee on the Housing Crisis (HOUS), highlighting the issue’s political weight. Hearings on sustainable housing, investment gaps, and the social-energy nexus have begun, but the committee’s final report is delayed, reflecting the complexity and difficulty of consensus. 

With the first-time ever Housing Commissioner being Danish, this Presidency has a unique responsibility to frame the right priorities for next year’s EAHP. Although housing being a growing issue in Poland, the topic was absent from the EPSCO’s agenda during its Presidency. Instead, Denmark, whose Housing First initiative is considered one of Europe’s leading examples of housing policies, has put affordable housing on their Presidency programmeand is working towards adopting Council Conclusions on the forthcoming EAHP. The real test will be whether the initiative reflects the right priorities and responds to the expectations of both citizens and Member States. 

The role of cities and regions  

While many housing challenges are shared across the EU, they remain fundamentally local or regional. Different areas face distinct housing problems and require tailored solutions. Barcelona, for instance, has announced a full ban on tourist apartments by 2028, setting a precedent for how far local governments can go in regulating short-term rent platforms. In Central and Eastern Europe, challenges stem from post-communism privatisation, which boosted home ownership but eroded affordable social housing. Some countries respond with targeted measures: Czechia offers municipal subsidies linked to income and dwelling size, while Poland’s Housing for a Startprogramme supports households financially during their first rental year, in partnership with municipal providers and the National Development Bank. 

Closing the gaps in the Europe’s housing crisis 

Tackling Europe’s housing crisis requires moving beyond fragmented initiatives towards a comprehensive, long-term framework. The following policy recommendations provide a roadmap for the EAHP:   

1. Scale up investment and financing tools 

Europe needs a major boost in the construction and renovation of social and affordable housing. Mobilising both public and private capital, and introducing new tools such as Social Investment Windows, performance-based guarantees, and Special Purpose Vehicles (SPVs), can help make smaller projects bankable. 

2. Strengthen data, transparency, and definitions 

A lack of reliable housing data and inconsistent definitions undermine policymaking. The EU should improve affordability metrics, monitor short-term rentals, and standardise indicators in the EPSR Social Scoreboard. Clear distinctions between social and affordable housing are essential to guide funding priorities and ensuring that the lowest-income households are not left behind. 

3. Adapt regulatory and structural frameworks 

EU rules must be updated to unlock investment and accelerate delivery. Broader state aid exemptions, simplified housing standards, and alignment with sustainable finance and social impact regulations can lower costs and allow municipalities to act more effectively. 

4. Empower local authorities 

Cities and municipalities are on the frontline. They need direct access to EU funds, technical support through tools like the Housing One-Stop-Shop, and co-investment opportunities with national and regional promotional banks under the new EIB plan. Instruments like Housing First and the European Platform on Combatting Homelessness are fundamental in the fight against homelessness and should be implemented locally. 

5. Leverage partnerships and sustainable models 

Housing should be inclusive and sustainable. Public-private partnerships and mixed-use projects can pool funding while maintaining public control over affordability. Models that integrate social services, promote energy efficiency, and foster cohesion between families, students and the elderly can create resilient communities. 

6. Build European capacity and long-term vision 

A European Platform for Social Housing should pool resources, share best practices, and scale up successful models like Denmark’s limited-profit housing. Long-term strategies, innovation in design and financing, and robust monitoring frameworks are essential to move beyond crisis management and establishing housing as a cornerstone of Europe’s social model. 

The draft Council Conclusions on the EAHP give the Danish Presidency an opportunity to set the tone for the initiative. Promises will not pay the rent, but by seizing this moment, the Danish Presidency can demonstrate that the EU is serious about delivering solutions for affordable and social housing. 

Elizabeth Kuiper is the Associate Director & Head of the Social Europe and Well-being programme at the EPC.

Xheimina Dervishi is a Junior Policy Analyst in the Social Europe and Well-being programme at the EPC.

The support the European Policy Centre receives for its ongoing operations, or specifically for its publications, does not constitute an endorsement of their contents, which reflect the views of the authors only. Supporters and partners cannot be held responsible for any use that may be made of the information contained therein.

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