Analysis of the European Rental Market
A recent report by the Council of Europe notes that Lisbon, Barcelona, and Madrid lead among EU cities in terms of the share of income spent on rent. In the Portuguese capital, this figure reaches 116% of the average salary, while in the two Spanish metropolises it is 74%. These findings were released ahead of the housing policy discussion at the Brussels summit, where, for the first time, EU leaders will address this issue on the agenda.
Experts emphasize that differences between countries complicate the development of universal solutions. European initiatives can support national efforts to improve housing stock, but some measures are contentious. In particular, there is debate about the effectiveness of rent control without simultaneously increasing supply.
Impact of Regulation and Price Trends
Recently, the European Commission has expressed concern over the rent cap policy promoted by the government of Pedro SΓ‘nchez. According to analysts, such measures could lead to reduced supply, declining interest from property owners, the emergence of a shadow market, and worsening shortages of affordable apartments. The report highlights that, without comprehensive programs to expand supply, these restrictions may do more harm than good.
In Spain, rental prices have increased by 72% over the past ten years, surpassing the EU average (58.33%) but remaining below the rates in Hungary, Lithuania, Portugal, and Bulgaria. Meanwhile, Finland was the only country where prices declined (-0.4%). The slowest growth was recorded in Italy, Cyprus, and France.
Demographic and economic factors
Rising demand for housing, especially in economically developed cities, continues to push prices upward. From 2013 to 2018, several capitalsβincluding Lisbon, Dublin, Madrid, Stockholm, and Luxembourgβexperienced rental price increases that far outpaced national averages.
In response to these challenges, governments across various countries are considering regulatory measures, implementing subsidies, and cooperating with institutional investors to boost the supply of rental properties. However, the long-term effects of these actions remain unclear.
According to Council data, Spain ranks fifth in the EU for the age at which young people begin to live independentlyβthe average is 30 years old. Only Croatia, Slovakia, Greece, and Italy have later average ages for leaving the parental home.
Construction prospects and European Commission plans
Despite economic uncertainty, Southern European countries maintain a positive outlook for housing construction. In Spain, volumes are expected to grow by 3.2% this year, by 4% in Portugal, and by 10% in Greece. These trends are supported by recovery fund investments, large-scale infrastructure projects, and interest in energy-efficient modernization.
European Commission President Ursula von der Leyen has already stated her intention to make housing affordability a key part of the EU agenda. According to her, the housing crisis affects not only the real estate market, but also Europe’s social stability and competitiveness. In December, the European Commission plans to present the first pan-European plan to ensure affordable housing.
