The European Commission Presents an Affordable Housing Plan: Housing Prices in the EU Increased by More Than 60% Over the Decade, More Than Doubled in Lithuania

The European Commission (EC) has presented Member States with an official communication on the European Affordable Housing Plan. The document acknowledges that housing affordability has become a challenge across Europe, affecting the economy, social cohesion, and regional development. It also outlines a plan to address this issue.

The communication states that between 2013 and 2024, housing prices in the European Union (EU) increased on average by more than 60 percent, rising faster than household incomes. It is projected that over the next decade, the EU may face an annual shortfall of up to 650,000 dwellings, with required investments reaching up to EUR 150 billion per year.

A similar situation is observed in Lithuania. Since 2015, housing prices in the country have more than doubled, while rental prices have increased by approximately 65 percent — a faster growth rate than the EU average. Currently, Lithuania faces a shortage of around 10,600 social housing units, and in some municipalities waiting times reach nearly the maximum limit of three years.

In 2024, in major cities nearly 10 percent of residents spent more than 40 percent of their income on housing, while in rural areas the share was even higher. The overcrowding rate (where a dwelling does not provide a separate room for an adult resident or couple, or for two children of the same sex aged 12 to 17) also remains high — exceeding 30 percent in large cities, compared to a significantly lower EU average.

The EC document notes that housing supply currently does not meet demand due to high construction costs, a lack of innovation, and shortages of skilled labour. As a result, the housing crisis is now affecting not only socially vulnerable groups but also young people and middle-income earners.

The European Commission considers this situation to be a structural problem and has prepared a four-pillar action plan.

The first pillar focuses on increasing housing supply. Proposed measures include boosting productivity and innovation in the construction sector, reducing bureaucracy, and improving housing quality and sustainability. The EC proposes simplifying permitting procedures, promoting modern construction methods, encouraging building renovation, and facilitating the conversion of buildings instead of demolition. A housing simplification toolkit will also be prepared to help Member States review and streamline national permitting rules and building codes. Support for the preparation of renovation plans is also emphasised.

The second pillar addresses investment. The plan aims to mobilise both public and private funding for the construction of social and affordable housing, simplify state aid rules, and establish a common European investment platform to help Member States more easily attract financing for housing projects.

The third pillar focuses on short-term rentals, speculation, and structural reforms. It acknowledges that these factors contribute to rising housing prices and reduce the supply of long-term rental housing. Member States will be able to assess the impact of these factors on their housing markets and adopt appropriate measures.

The fourth pillar addresses young people and the most vulnerable groups. The EC proposes targeted programmes for young people, the expansion of student housing, and strengthened support for vulnerable households.

“The European Commission’s plan sets out the key instruments for shaping housing policy, but concrete decisions will be taken at the national level. Lithuania is seeking systemic, data-driven solutions rather than isolated measures. We are already accelerating construction permitting procedures and reducing bureaucracy. We are currently awaiting the results of a study assessing opportunities to improve housing affordability. Once these results are summarised, we will prepare a National Housing Affordability Strategy,” says Laura Lukoševičienė, Head of the Housing Affordability Policy Group at the Ministry of Environment.

The results of the study assessing opportunities to improve housing affordability will be published at the beginning of summer. The study will provide a comprehensive assessment of the housing affordability situation in Lithuania and propose measures to increase affordability. It will help evaluate the current situation, forecast future trends, and develop a long-term sustainable strategy.

The European Commission’s plan is available here.