BRUSSELS, 7 July 2025 — Europe is confronting an escalating housing crisis, marked by rapidly deteriorating affordability and availability across its major cities. Barcelona’s mayor, Jaume Collboni, recently declared that “the housing crisis is now as big a threat to the EU as Russia,” a stark statement underscoring the profound political and social ramifications of spiraling rents and stagnant home ownership rates. At the heart of this multifaceted crisis is a dramatic power shift: financial institutions are increasingly controlling Europe’s housing stock, transforming homes into lucrative commodities at the expense of residents and communities.
Soaring Housing Costs Fuel Inequality and Political Discontent
From Dublin to Milan, families across Europe are finding themselves allocating up to half their disposable income on rent. Data from Eurostat, published in early July 2025, indicates that between 2010 and the first quarter of 2025, rents in the EU increased by an average of 27.8%. In some urban centers, median rents have surged even more, pushing many into overcrowded or insecure living conditions. For instance, in 2023, 8.8% of people in the EU lived in households spending 40% or more of their disposable income on housing, with Greece at a staggering 28.5% and Denmark at 15.4%. This crisis disproportionately impacts working- and middle-class households, as well as minority groups, further entrenching social divides and exacerbating existing inequalities.
These dire conditions are fueling widespread political disenchantment and contributing to the rise of far-right movements across the continent. Analysts increasingly link housing grievances to growing support for parties such as Germany’s Alternative für Deutschland (AfD) and the Dutch Freedom Party (PVV), reflecting widespread distrust in democratic institutions to solve core social problems. Such issues underscore how economic hardship can shift political landscapes, a phenomenon frequently examined in our EU Politics coverage. The inability to afford stable housing creates a pervasive sense of insecurity and resentment, which can be exploited by populist narratives that blame external factors or specific demographic groups.
Institutional Investors Reshape the Housing Landscape
The most visible driver of this transformation is the surge in institutional ownership of residential property. Since the 2008 financial crisis, private equity firms, hedge funds, pension funds, and insurance companies have systematically amassed a growing share of Europe’s housing stock. By 2023, global real estate assets managed by institutional investors reached an estimated $1.7 trillion, a sharp increase from $385 billion in 2008, according to industry reports. The European residential real estate market alone is projected to reach a size of USD 2.89 trillion in 2025, reflecting significant institutional interest.
Europe’s residential market is a particular target due to its perceived stability and strong returns. According to industry experts, residential real estate offers “stronger risk-adjusted returns than any other sector.” Institutional investors’ purchases of euro-area residential property have tripled over the past decade, a trend noted by the European Central Bank (ECB), which has highlighted the link between increased investor demand and rising house prices.
The scale of institutional ownership in specific European cities and countries is striking:
- In Ireland, nearly half of all housing units built since 2017 have reportedly been acquired by investment funds, contributing to a severe homelessness crisis where over 13,841 individuals, including more than 4,000 children, accessed emergency accommodation as of late 2024.
- Sweden reports institutional landlords controlling 24% of private rental apartments.
- Berlin holds an estimated €40 billion in housing assets within institutional portfolios, representing about 10% of its total stock.
- In the Netherlands’ four largest cities, a quarter of homes sold recently went to investors.
- Vienna, despite its extensive public housing system, sees institutional players owning 10% of all housing units and 42% of new private rental homes.
Profit Motives Intensify Affordability Challenges
These financial actors operate with a fiduciary duty to maximize returns for shareholders, which often include pension funds relied upon by ordinary citizens for their retirement. Consequently, strategies to increase rents and reduce maintenance costs are common. Practices like “renoviction”—renovating properties to justify higher rents or evictions—have become widespread across Europe, as highlighted by a report on equitable, climate-resilient housing in Southern Europe. For example, reports indicate that when investment funds acquired Stockholm apartments, rent hikes reached up to 50% on some units following renovations.
Even sustainability retrofits, often presented as “green” initiatives to align with EU environmental goals, can be leveraged to justify steep rent increases. This dynamic fuels displacement and undermines tenant security, effectively making existing housing less affordable for current residents.
Decades of Policy Shifts Facilitated Corporate Dominance
The unprecedented rise of financial ownership in housing is rooted in decades of housing market liberalization and privatization across Europe. From the 1980s onward, many European governments systematically offloaded public housing stock into private hands. Berlin’s notable 2006 sale of 60,000 flats to Deutsche Wohnen at approximately €7,500 each exemplifies this pervasive trend.
Concurrently, welfare states gradually retreated from direct housing provision. Governments increasingly relied on demand-side policies, such as liberal mortgage credit, which, while ostensibly increasing access to homeownership, ultimately inflated prices and household debt. The 2008 financial crisis then presented a critical opportunity for investors to acquire distressed assets at reduced prices across Southern Europe, including Spain, Portugal, Greece, and Ireland.
Since then, many governments have actively sought to “de-risk” private investment in housing by weakening tenant protections, easing planning regulations, and granting substantial subsidies and tax breaks to institutional landlords and real estate investment trusts (REITs). Renters have consequently borne the brunt of these policy shifts, facing soaring costs and increased precarity, including more frequent evictions.
Institutional Investors Frame Themselves as Part of the Solution
Paradoxically, financial actors frequently position increased real estate investment as a remedy to Europe’s housing shortage. Blackstone, for instance, a major global investor, claims its activities help address undersupply in the market. However, evidence often contradicts this narrative: independent analyses show that housing supply and home ownership rates have not risen significantly in line with investment, while prices and rents have climbed steadily, often outpacing wage growth.
Experts note that institutional investors are generally not incentivized to increase housing supply dramatically, as shortages tend to sustain high prices and ensure robust cash flows. A London-based asset manager candidly observed that housing undersupply is “supportive for cashflows,” while Blackstone’s president has warned that “capital and cranes” (i.e., increased construction) are warning signs of overheating markets, implying that oversupply could undermine profitability.
Where institutional capital does build new homes, these often take the form of high-margin products such as micro-apartments, build-to-rent schemes, and co-living spaces, examples of which are becoming more common across European cities, as evidenced by platforms like Coliving.com. These developments typically cater primarily to affluent singles or transient populations rather than families, and frequently remain unaffordable for the majority of residents struggling with the housing crisis.
Rising Resistance and Calls for Reform
Housing’s deepening role as a driver of social discontent has ignited widespread mobilizations across Europe. In October 2024, approximately 150,000 demonstrators marched through Madrid, demanding decisive policy action from their government to address the crisis. Similar protests have occurred in other major European cities as public frustration mounts.
Some European governments, including Denmark and the Netherlands, have introduced specific measures to curb speculative investment, such as restrictions on foreign buyers or changes to tax regimes. However, real estate capital often maintains outsized influence, effectively exploiting regulatory loopholes and lobbying aggressively against policies threatening profit margins.
In Berlin, citizens voted overwhelmingly in 2021 in a non-binding referendum to expropriate apartments owned by large corporate landlords (those owning over 3,000 units), with 59% in favor. Despite this clear democratic mandate, political inertia and legal complexities have significantly stalled the implementation of this measure. Similarly, Blackstone openly opposed Spain’s proposed mandate that institutional landlords dedicate 30% of their portfolios to social housing, arguing instead for direct government subsidies to individual tenants.
The Need for Structural Change and Broader EU Alignment
This crisis fundamentally illustrates a flaw in relying on finance capitalism to deliver a social good as vital as housing. The relentless commodification of homes prioritizes profit over people, systematically eroding residents’ power and deepening existing inequalities. This is a critical issue that intersects with broader economic stability, a topic extensively covered in our EU Economy section, especially concerning the disproportionate impact on lower-income households, akin to issues highlighted in analyses of Hungary’s consumption drop under Fidesz.
To effectively address Europe’s housing emergency, policymakers must reclaim housing from speculative markets and reassert public provision and robust tenant protections. Such structural reforms will be central to stabilizing communities, ensuring social cohesion, and restoring trust in democratic governance. This includes aligning housing policy with the principles of the EU’s Green Deal, ensuring that necessary sustainability retrofits do not become a pretext for “renovictions” but rather contribute to genuinely affordable and equitable housing.
Housing will undoubtedly remain a defining political issue in Europe’s coming years, demanding coordinated action across social, economic, and environmental policy domains. Addressing this crisis is not just a matter of social justice but a fundamental requirement for the stability and future viability of the European project itself.