Europe’s cities are pricing out the people who keep them running.
Teachers can’t afford to live near the schools where they teach. Nurses commute two hours to the hospitals where they save lives. Police officers patrol neighborhoods they could never afford to call home.
Housing prices in the EU have risen by more than 60 percent in the last ten years. Rents climbed 21 percent. In Hungary, house prices more than tripled, rising 275 percent. Lithuania saw a 162 percent increase. Portugal hit 169 percent.
This is a fundamental breakdown in how our cities function.
The Data Behind the Displacement
The European Commission’s Affordable Housing Plan documents the problem: essential workers, including teachers, nurses, firefighters, and police officers, cannot afford to live in the communities they serve.
Key workers are unable to live near their workplaces, undermining essential services.
A nurse working night shifts in central Madrid spends her salary on rent in a distant suburb. She loses hours to commuting. She arrives exhausted. The hospital struggles to retain staff. Patient care suffers.
A teacher in Barcelona turns down a position at an excellent school because housing costs would consume 70 percent of her salary. The school settles for less qualified candidates. Students lose out.
A police officer in Dublin leaves the force after five years because even with overtime, he can’t afford rent within 90 minutes of his station. The department loses experienced personnel to smaller towns where housing costs half as much.
This pattern repeats across Europe’s major cities. The system now excludes the people essential to its function.
The Short-Term Rental Accelerant
Short-term rentals accelerate the crisis, but they’re not the only driver. Restrictive zoning laws, construction costs, and real estate speculation compound the problem. Yet short-term rentals stand out for how rapidly they’ve transformed housing markets.
In 2023, 719 million nights were booked via short-term rental platforms in the EU, devastating long-term rental supply and accelerating housing shortages and gentrification.
Commercial operators dominate the market. In Lisbon, Porto, and Barcelona, over 70 percent of listings are managed by multi-property hosts converting residential housing into tourist accommodation.
Airbnbs make up 20 percent of the housing stock in Madrid, 10 percent in Barcelona, and up to 85 percent in Málaga.
When you remove that much housing from the long-term rental market, prices spike. Essential workers get priced out. Communities lose their social fabric.
The Economic Ripple Effects
Affordable housing shortages create economic problems beyond real estate markets.
Young people put off starting families. Students turn down the best universities. Essential workers decline jobs in major cities. All because they’re priced out of housing.
Research from the United States found that improving housing availability in key cities could have raised aggregate gross domestic product by up to 9 percent. European researchers are conducting similar analyses.
Cities lose talent. Companies struggle to recruit. Innovation hubs hemorrhage the talent that made them innovative. The talent doesn’t disappear—it relocates to cities where housing remains affordable, shifting economic activity away from traditional centers.
The Eurocities Pulse Mayors Survey 2025 found that 47 percent of Europe’s mayors say housing affordability is at serious risk in their city.
Empty storefronts. Declining school enrollment. Emergency services are struggling to staff shifts. A housing market that no longer serves the people who live and work in these cities.
The Policy Response
Dan Jørgensen’s appointment as the EU’s first housing commissioner marks a turning point. Housing has never been on the EU’s agenda at this level.
Jørgensen framed the issue clearly: tourism is a good thing, but it’s not good if it feels like it’s ruining the lives of the people who live in these cities.
For years, housing policy remained a national concern. The crisis now demands European-level attention.
Solutions require coordination across tourism, economic development, urban planning, and social welfare.
State aid for affordable housing requires member states to prioritize long-term housing supply over short-term tourism revenue—a difficult calculation in tourism-dependent cities.
Some cities demonstrate that balance is possible. Vienna maintains 60 percent of its housing stock as social housing, keeping the city affordable for essential workers while remaining a major tourist destination. Barcelona announced plans to phase out 10,000 short-term rental permits by 2028, directly targeting the conversion of residential housing to tourist accommodation. These aren’t perfect solutions, but they show regulatory intervention can work when political will exists.
The challenge mirrors what Europe faces across policy domains: asking member states and cities to accept immediate economic costs for long-term strategic benefits. Energy policy presents the same tension at a different scale.
The Energy Independence Parallel
The housing crisis reveals a governance challenge that appears across EU policy. Energy independence provides the clearest parallel.
Jørgensen announced the EU’s commitment to cease importing Russian liquefied natural gas by 2027—a shift that, like housing policy, requires member states to accept short-term economic pain for long-term strategic benefit.
Since the start of the war in Ukraine, Russian gas imports dropped from 45 percent to 13 percent of total EU imports. Coal imports fell from 51 percent to zero. Oil imports declined from 21 percent to 2 percent.
The EU was sending Moscow 12 billion euros a month. Ending that flow has economic and geopolitical implications.
Hungary and Slovakia announced plans to challenge the regulation before the Court of Justice of the European Union. Both countries remain heavily dependent on Russian energy and face significant economic disruption from the phase-out.
The measure passed as a trade regulation, allowing it to advance by reinforced majority rather than unanimous approval, enabling progress despite opposition.
Long-term LNG import contracts can run until January 1, 2027. Pipeline gas imports end September 30, 2027.
What These Parallel Crises Reveal
Both crises reveal the same structural tension: unified policy collides with divergent national circumstances.
Tourism-dependent cities resist short-term rental regulations that might reduce visitor capacity. Energy-dependent countries resist rapid phase-outs that threaten economic stability. The pattern is identical—immediate revenue versus long-term resilience.
Solutions require European coordination with local flexibility. Vienna’s social housing model won’t transplant to Athens. Germany’s renewable infrastructure isn’t replicable in Hungary overnight. But the underlying principles—prioritizing long-term resident needs, diversifying dependencies, investing in alternatives—apply universally.
The Stakes of Inaction
Without action, social and economic consequences compound.
Inequality deepens. The gap between property owners and renters widens. Cities lose the economic and social diversity that makes them dynamic.
Essential services deteriorate measurably. Emergency response times lengthen when paramedics commute from distant suburbs. Teacher turnover accelerates when housing consumes 60-70 percent of salaries. Hospital nursing shortages worsen as staff relocate to affordable regions. The costs appear in declining service quality long before they show up in economic data.
Housing affordability ranks among voters’ top concerns. When the system fails them, they seek alternatives that can undermine the European project.
Continued dependence on Russian energy funds’ geopolitical adversaries leaves Europe vulnerable to supply disruptions and price manipulation. Rushed transitions without support for affected regions create political backlash.
Moving Forward
Addressing these challenges requires implementation that accounts for ground-level realities.
For housing, this means:
Regulating short-term rentals to preserve tourism benefits while protecting long-term housing supply. Cities need tools to limit commercial operators and preserve residential neighborhoods.
Increasing housing supply through streamlined planning processes and targeted investment in affordable housing. Supply constraints drive prices up. Addressing those constraints is fundamental.
Supporting essential workers through employer-assisted housing, rent subsidies, or priority access to affordable units. Public sector employers in particular need tools to compete with private sector housing competition.
For energy independence, this means:
Providing transition support for regions dependent on Russian energy, including investment in alternatives and economic support for affected communities.
Accelerating renewable energy deployment to replace Russian imports with domestic clean energy.
Improving energy efficiency to reduce demand and ease the transition.
The Underlying Question
Both crises converge on one question: Can Europe build coordinated policy while respecting sovereignty and local variation?
The appointment of a housing commissioner and the Russian energy phase-out agreement represent political commitments. Implementation determines whether those commitments produce results.
That implementation happens through national governments prioritizing long-term affordability over short-term revenue, through city councils enforcing regulations against commercial housing operators, through planning boards approving affordable housing over luxury developments, and through public and private investment in alternatives to current dependencies.
The political will exists. The institutional capacity is being built. The question is speed.
Every month of delayed action prices more essential workers out of European cities. Every quarter of continued Russian energy imports funds geopolitical adversaries. The costs of inaction accumulate faster than the benefits of caution.
Europe knows what needs to happen. The test is whether it can move fast enough to matter.