Property prices have risen by over 60% since 2015, and rents continue to increase in major cities. In response, lawmakers support a new affordability plan that includes building more homes, providing family subsidies or tax incentives, and regulating rent prices to address what many consider a broken market.

For residents of Portugal, including many foreign nationals, these challenges are tangible. They are experienced each time someone searches for an apartment, renews a lease, or attempts to purchase property.

Income and housing cost gap

Across the EU, the gap between income and housing costs has widened over the past decade. In many cities, purchasing a home now requires the equivalent of eight to ten years’ salary, and even more in the least affordable capitals.

The causes are complex. Urban expansion and population growth have increased demand, while smaller households require more housing overall.

However, supply has not kept pace. Addressing these challenges is essential to ensure that accessible housing remains a right, supporting quality of life, economic stability, and social cohesion.

Building new homes

Building new homes is now slower and more costly. Land and construction material prices have increased, and permitting processes can take years.

Additionally, prolonged low interest rates before 2022 contributed to rising real estate prices.

As financing costs rose, mortgages became less affordable, pushing more people into the rental market and further increasing rents.

The European Parliament has adopted its first major report focused entirely on the housing crisis, calling for a more coordinated response among Member States.

Control the housing markets

The EU cannot directly control housing markets—those decisions still rest with national governments—but it can influence how the situation evolves.

The plan aims to increase housing supply, accelerate construction, and attract more investment. It also emphasises reducing bureaucracy, which is often cited as a cause of development delays.

The EU also plans to provide additional financial support to the sector: billions of euros have been allocated to housing projects from 2021 to 2027, with further funding anticipated.

Support social housing

Some of this funding will support social housing and renovation projects. Another portion will focus on energy efficiency, helping families lower their bills and improve their living conditions.

There is also an effort underway to modernise construction through faster building techniques and digital tools to expedite home delivery.

National rules

A challenge for the EU is that housing policy remains largely a national matter. Each country sets its own rules on rents, planning, taxation, and housing models.

As a result, the European plan can provide guidance and support, but cannot enforce measures.

Local authorities are expected to play a key role, especially in streamlining permit processes. Local authorities are expected to play a key role, particularly in streamlining permit processes and identifying priority areas for new housing. It shapes labour markets, mobility, and economic growth.

The EU is preparing further actions, including a housing summit and a broader alliance of governments, cities, and industry representatives.

For many, finding a home is no longer a routine stage of life but has become one of their greatest challenges.