How cohesion policy helps solve Europe’s housing crisis
- 12 Mar 2025
Not just a working-class problem
The problem is not, however, confined to the economically active who cannot afford to buy a house. The increases in housing costs lead to rampant homelessness, with an estimated 1.3 million homeless people.
Even the Europeans with their own home confront cost of living or other type of issues. Approximately 9 % of EU citizens cannot heat their home adequately, and 15 % live in homes with leaking roofs, damp, or rot. In addition, some 17 % live in overcrowded dwellings, while 34 % occupy homes that are too big for them.
In 2023 alone, 10% of the EU population spent up to 40% of their disposable income in housing and related costs. Close to 11 % of EU city dwellers are in this situation, with the highest shares in Greece (34.2%), Denmark (25.4%) and Germany (24.5%) and Malta at the other end of the curve (9%). Around 9 % of households are late in paying their mortgage, rent or utility bills.
EU action
Once an exclusive competence of member states, the issue of affordable housing has become a shared challenge across Europe. In response, the European Commission appointed its first-ever Commissioner for Housing, Dan Jørgensen, in 2024. To support his mandate, a dedicated housing task force began its work in February 2025, coordinating efforts across the EU.
The EU has been steadily increasing its focus on housing. In 2021, the European Parliament passed a urging member states to recognise adequate housing as a fundamental human right. Consequently, the Parliament also established a Special Committee on Housing to identify concrete solutions
Speaking before this very Committee in February 2025, Commissioner Jørgensen emphasized the EU’s role in easing the burden on local authorities. While respecting subsidiarity, he highlighted how the EU can help by addressing supply shortages, simplifying regulations, and promoting access to new technologies and innovative materials. He also pointed to existing financial commitments, noting that the Recovery and Resilience Fund has already allocated €21.3 billion for housing investments and reforms, and called for a doubling of Cohesion Policy investment in affordable housing.
How cohesion policy makes a difference
Speaking at the same occasion as Commissioner Jørgensen, Executive Vice-President for Cohesion and Reforms Raffaele Fitto reiterated the Commission’s commitment to addressing the crisis, emphasizing that “cohesion policy already plays a key role in supporting housing.” Currently, €7.5 billion has been allocated for housing through cohesion policy funds, rising to €10.5 billion with national co-financing.
However, Fitto made it clear that “we need to do more—not only in the next Multiannaul Financial Framework, but also right now.” He pointed to the midterm review of cohesion policy as a key moment to adjust investments and align them with emerging needs. To accelerate these efforts, Fitto has written to all national ministers for cohesion policy and engaged with regional and managing authorities across Europe, advocating for a doubling of housing investments.
He also highlighted the need for cohesion policy to evolve with the times, recognizing that “housing challenges in rural areas or islands are very different from the specific needs of urban areas.” This requires tailor-made solutions that reflect the diverse realities across Europe.
As the Housing Task Force begins its work coordinating efforts, pooling knowledge and contacting partners to address the crisis, EVP Fitto concluded his intervention with a call for collective action “to find solutions that drive real change.”
As the Commission steps up its efforts to tackle the housing crisis, cohesion policy remains one of the EU’s few tools to address the shortage of affordable, quality homes. It can help counter regional depopulation as people migrate to cities, address the affordability crisis by tackling rising home prices and rental costs, and ensure dignified living conditions for urban populations. Additionally, it supports energy renovations to curb soaring energy costs and invests in infrastructure improvements that make cities more liveable.
As EVP Fitto made clear at the European Parliament, cohesion policy investments primarily target “two crucial areas: energy efficiency,” which lowers energy bills while benefiting the environment, and “social housing,” ensuring affordable homes for low-income families and vulnerable groups.
Energy efficiency accounts for 86 % of the EU support. Housing infrastructure, including for migrants and refugees, makes up 14 %. In almost all Member States – Czechia and Italy being the exceptions – most of the funding is dedicated to energy efficiency.
Moreover, its projects incorporate the principles of the New European Bauhaus initiative, which promotes sustainable, inclusive and aesthetically pleasing housing.
In terms of size of allocation by country, Poland has by far the biggest, with its EU and national contributions together coming to over € 3 billion. Its EU contribution is more than those of the countries with the next five largest amounts combined.
In overall relative terms, Estonia has the biggest allocation at € 28 million per 100 000 inhabitants. It also has the largest energy efficiency allocation relative to population, whereas Latvia has the largest relative allocation for housing infrastructure.
Regarding Europe-wide outputs for 2021-2027, the energy performance of more than 725 000 dwellings should be improved, and social housing for almost 59 000 people should be built or renovated.
Success stories
Examples from 2014-2020 show how the funding can be translated into projects to achieve these targets.
In Madrid, resettlement and support programmes for marginalised families resulted in the purchase of 422 social housing units, which were made available for rent. The units are dispersed within mainstream areas to aid integration. Social workers helped the families with access to education, employment and social services.
Northern Sweden’s Sustainable and Affordable Housing for the New Green Industry and Society project helped build seven housing complexes. These contain some 750 energy-efficient social housing units in Skellefteå. Around half of the units are for students at the local university campus, to boost the supply of skills for the green transition. A further 20 % are for people on low incomes, people with special needs and refugees.
In Porto, Portugal, an €8 million initiative has significantly enhanced public housing by installing thermal insulation, reinforcing windows, and adding solar thermal collectors. These upgrades have reduced energy consumption by nearly 47%, leading to lower bills and increased comfort for residents.
In Panevėžys, Lithuania, €1.8 million transformed a disused dormitory into 71 social housing units, comprising 52 one-room, 15 two-room, and 4 three-room apartments. The project also developed a playground, green spaces, and parking areas, providing quality homes for families in need.
Belgium's Leuven saw a €3 million renovation of a 120-apartment social housing complex, enhancing both affordability and sustainability.
In Hungary's Hősök tere/György-telep area, €1.7 million revitalized 48 previously uninhabitable municipal apartments. Renovations included connecting all apartments to public utilities, adding bathrooms and kitchens, and landscaping surrounding areas, thereby offering modernized living spaces for local families.
These projects demonstrate how cohesion policy is already secure, sustainable housing options for Europeans and helping Europe navigate the housing crisis.