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Selected macroeconomic and social aspects of housing affordability

Author

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  • Mirko Licchetta
  • Vitor Martins
  • Bořek Vašíček

Abstract

Over the past decade, the housing market in the EU has been characterised by significant price growth, putting pressure on housing affordability. Despite a price moderation in 2022 and 2023 due to monetary tightening and increased mortgage interest rates, house prices remain historically high in approximately three-quarters of the EU, highlighting an underlying mismatch between demand and supply. On the demand side, urbanisation and demographic changes have driven up demand, while on the supply side, constraints in construction have hindered the market's ability to meet demand, leading to reduced affordability. To improve overall housing affordability, there is an urgent need to increase investments in new construction and in the renovation of existing stock as well as to review the role of regulation and to improve administrative capacity, which have been hindering the expansion of housing supply in the recent decades.

Suggested Citation

  • Mirko Licchetta & Vitor Martins & Bořek Vašíček, 2025. "Selected macroeconomic and social aspects of housing affordability," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission, vol. 24(1), pages 31-39, June.
    • Handle: RePEc:euf:qreuro:0241-02
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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