By Euronews
Published on
Housing affordability is deteriorating across Europe, but Portugal has emerged as the EU country with the most overvalued property prices.
“The Commission estimates that the average overvaluation is most substantial in Portugal, at around 25%, surpassing other overheated property markets in Sweden, Austria or Latvia,” according to a report accompanying the European Commission’s affordability push.
Prices, the Commission warns, are rising far faster than people can keep up with. “Price growth has been stronger than income growth, reducing affordability for potential buyers, with marked differences between countries,” the report said.
“The countries with the biggest increases in PTI ratios (price-to-income ratio) over the last decade were Portugal, the Netherlands, Hungary, Luxembourg, Ireland, Czechia and Austria, with PTI ratios more than 20% higher than ten years ago,” the figures indicate.
A PTI ratio is the price-to-income ratio, a standard indicator used to assess how expensive something is relative to how much people earn.
After a decade in which average house prices have climbed by more than 60% and rents by over 20%, growing numbers of Europeans are struggling to secure housing.
The Commission warns that the crisis is restricting labour mobility, limiting access to education and delaying family formation, with broader consequences for both the EU’s economic competitiveness and social cohesion.
The Commission’s plan for housing
According to the European Commission, their new plan is designed to increase housing supply, encourage investment and reforms, tackle the impact of short-term rentals in areas facing housing shortages and provide targeted support to those most affected by the crisis.
The strategy places particular emphasis on young people, students, essential workers and low-income households, as well as other vulnerable groups.
It also envisages closer cooperation with national authorities to address structural obstacles such as construction bottlenecks and housing pressures in tourist areas heavily saturated by short-term accommodation.
“The Commission will work with national, regional and local authorities to simplify the rules and procedures that restrict the supply of housing, with a particular focus on planning and licensing,” the statement reads.
Speaking to Euronews’ Europe Today programme, the European Commissioner for Housing, Dan Jørgensen, said that Brussels was committed to identifying speculation and promoting market fairness as part of its first affordable housing plan.
“Housing is a major concern. We are experiencing a housing crisis and consequently a social crisis,” Jørgensen told Euronews.
Among the measures announced is a revision of state aid rules to allow governments to support social and affordable housing projects without prior notification and authorisation.
Until now, housing was only eligible for state aid for limited projects designed to help only the most needy.