The Lisbon housing market is, to put it bluntly, insane. The average worker needs to spend 116 per cent of their salary on rent. Quite how that is achieved is a total mystery, and probably involves people working two jobs. Barcelona and Madrid demand three-quarters of income. Even Warsaw, Prague, or Budapest demand rent that exceeds more than half an average salary.
That European policymakers have spent years treating housing as an awkward domestic matter, best left to local councils and market forces, is part of the problem. It’s perhaps time that they should recognise it for what it is: a threat to national security.
That claim is neither hyperbole nor scaremongering. Reinvantage does neither. Housing evokes images of estate agents and mortgage brokers, not generals and spies. But security has always meant more than missiles and borders. Is a state that cannot shelter its citizens even a state? When one in ten urban households spends more than 40 per cent of income on housing (the EU’s threshold for cost overburden) the consequences become big enough for even defence ministries to notice.
The cost of housing uncertainty
Across the Organisation for Economic Co-operation and Development (OECD), a club of mostly rich countries, fertility has fallen from 3.3 children per woman in 1960 to around 1.5 today. Germany, Estonia and Austria now record rates below 1.4, what demographers call ‘ultra-low’ and what anyone else should call alarming.
The causes are multiple, but research from the Netherlands now demonstrates a direct link between rising house prices and fewer births, particularly among renters and first-time parents. Young adults who cannot access family-friendly housing simply postpone children, often past the point of having them at all. The EU’s population peaked around 2021 and has since been in decline. In hollowed-out Bulgarian, Latvian, or Romanian villages, that future is already visible.
Then comes mental health. Housing insecurity does not merely cause stress, it reshapes psychology. Studies across 27 EU states show that falling into rent arrears produces health declines comparable to losing a job. The bidirectional relationship is vicious: anxiety makes coping with housing problems harder, while housing precarity amplifies every other life difficulty. For older adults in gentrifying cities like Porto, displacement correlates with loneliness, cognitive decline and elevated mortality. A generation raised in perpetual housing uncertainty carries scars that do not show on balance sheets.
And what happens when the unpropertied grow old? Britain offers a preview. Since 2022, the number of households with members over 65 in temporary accommodation has risen by 41 per cent. Denmark also reports climbing homelessness among the over-60s. These are not vagrants with addiction problems but former workers who rented throughout their careers, built no equity, and now find pensions insufficient for market rents. Multiply this across a continent where 32 per cent of residents are tenants, and the scale of the coming crisis becomes apparent. Who will house them? On what budget?
When citizens feel abandoned
The political ramifications are already materialising. Housing insecurity creates fertile ground for extremism. Across Europe, far-right parties have weaponised the crisis, promising homes for ‘our own citizens’ while scapegoating immigrants. The argument (as with much that emanates from the far-right) is economically illiterate. It is also (again, like much that emanates from the far-right) a vote-winner. When institutions fail to provide for basic needs, trust in centrist parties falls. The AfD’s surge in Germany, the Freedom party’s triumph in Austria, and housing-driven protests from Amsterdam to Madrid share a common root: citizens who feel abandoned by systems that once worked.
Solutions exist, although none are simple. Singapore houses 80 per cent of its population in state-built flats, integrating homeownership with compulsory savings and treating shelter as infrastructure rather than a commodity. Europe lacks the authoritarianism and concentrated land ownership that enable the Singaporean scheme (which has its limits), but the underlying principle (that governments must stop treating housing as purely a private concern) is sound.
The EU’s 10 billion euros investment pledge and appointment of a Housing Commissioner in 2024 signalled that it recognised the problem, if not much else. It remains grossly insufficient against a shortage estimated at nearly 10 million homes.
A single demographic strategy
More imaginative approaches deserve trial. Incentivising downsizing could free up larger homes. Around 57 per cent of older EU households under-occupy their homes, often rattling around houses built for children who have long fled the nest. Yet financial analysis shows that moving frequently does not release meaningful equity in lower-cost areas, and emotional attachment runs deep. Cohousing models, where seniors share facilities while retaining private spaces, address loneliness alongside efficiency; Denmark and the Netherlands have pioneered schemes that nonprofits can operate for moderate-income residents.
Social housing, gutted by decades of privatisation and under-investment, requires dramatic expansion, not the stigmatised, so-called ‘sink’ estates of British imagination but the well-integrated developments common in Vienna, where roughly 60 per cent of residents live in subsidised accommodation without anyone thinking them poor or undeserving.
Immigration complicates every calculation. Europe needs workers to fill shortages, care for the elderly, offset demographic decline, and (ironically) build homes. Those workers need somewhere to live. Pretending otherwise, or blaming migrants for a crisis decades in the making, achieves nothing except electoral success for populists. The smart policy would be to pair labour-market openings with housing construction, treating both as components of a single demographic strategy rather than antagonists.
Time to mobilise
Housing has for too long been someone else’s problem that fixing it now requires the kind of state mobilisation Europeans associate with wars and pandemics.
Poorer post-war governments somehow built millions of affordable homes; their far wealthier successors largely abandoned the field to markets that have failed comprehensively.
Reversing that failure means spending serious money, tolerating construction in places that prefer scenic views to tower blocks, and accepting that housing is not an investment or lifestyle aspiration but a necessity.
Treat it as anything less, and the cracks spreading through European society will only widen.
Photo: Dreamstime.
