Soaring House Prices Push European Dream of Homeownership Out of Reach

The dream of owning a home is becoming increasingly out of reach for many Europeans as rising property prices, coupled with a cost-of-living crisis, weigh heavily on city residents and low-income households, according to reports from German media.

Lamia Kamal-Chaoui, Director of the Center for Entrepreneurship, SMEs, Regions, and Cities at the OECD, highlights the sharp increase in house prices, which is particularly pronounced in large cities. This trend is no longer just affecting the poor but has extended to the middle class as well.

Both house prices and rents have been on a steady rise since 2014, a trend that continued even during the COVID-19 pandemic. Unlike previous economic downturns, the demand for housing surged during the pandemic as lockdowns and increased telecommuting kept people at home.

Young people are the most impacted by the housing crisis. They are staying with their parents longer, more likely to rent than own, and often deterred from pursuing better job opportunities in areas with higher living costs. This trend is a significant concern for cities, as Kamal-Chaoui notes, pointing out that if young people cannot afford housing, they are unlikely to settle in urban areas, regardless of the city's attractiveness. She also emphasizes that while housing demand continues to grow, the supply is failing to keep pace.