“Without the many shifts in a café in Germany, I would never have been able to afford my Erasmus semester here”. Lisa Obst, Erasmus student in Barcelona, explains what many young people in Europe are currently experiencing: Housing is becoming a luxury good. And hers is not an isolated case. Rising rents are not just a burden in Germany – people are struggling to find a place to live in Europe’s metropolises.
Housing is becoming a luxury good – and not just in Germany
Housing has never been as expensive as it is today. In Germany, the rent index rose by a whopping 8.6 percentage points between January 2021 and January 2025. The crisis does not stop at national borders: across the EU, rents have climbed by 22.8% since 2010.
An additional look at the housing cost burden shows just how dramatic the situation is: In Germany, households have to spend an average of 25.2% of their disposable income on housing – significantly more than the EU average of 19.7%.
Tobias Just, Professor and holder of the Chair of Property Management at the University of Regensburg, clearly identifies the causes: “This is a mixture of several reasons. The first reason is that we have built too little.” Added to this are rising incomes, falling unemployment and strong immigration into the cities. All of this ultimately leads to rising rents.
High housing costs are a burden for students in Europe’s metropolises
For Lisa Obst the crisis has long been a bitter reality: “I need all my Erasmus funding just for the monthly rent.” Without her previous work as a waitress in Germany, she explains, the semester abroad would have been difficult. Especially in popular cities like Barcelona, housing is becoming scarce due to tourism. Tobias Just explains: “An urban tourism factor is also causing a shortage there, namely that flats are being occupied so that they can be offered for purely tourist purposes.” Measures such as the planned ban on holiday flats by 2028 are intended to slow down the trend – but the problem remains acute.
Professor Tobias Just sees similar developments across Europe: “We have very similar problems in many urban centres.” The burden is particularly high in cities: 10.6% of the urban population in the EU spent more than 40% of their disposable income on housing. In Greece, this proportion was 31.0%, in Denmark 23.3%.
There are exceptions in structurally weak regions such as the south of Italy or Extremadura in Spain. However, this usually means that in periods of growth, structurally stronger urban centres attract people, while structurally weaker regions lose inhabitants.
In addition, more and more young adults are unable to find their own living space. The proportion of 25 to 34-year-olds in employment who still live with their parents has risen across the EU from 24% in 2017 to 27% in 2022. In Spain, the figure is now as high as 42%.
For students like Lisa, this has consequences that go far beyond their wallets: “You realise that you’re treated differently by the locals because you’re a tourist.”
Proportion of 25 to 34-year-olds in employment who still live with their parents has risen across the EU from 24 percent in 2017, Source: Becoming adults: Young people in a post-pandemic world, European Foundation for the Improvement of Living and Working Conditions, 2024
Solutions? Build, repurpose, relax rules
Experts see the housing shortage primarily as a supply problem. Tobias Just emphasises that it is essential to reactivate unused areas – such as former industrial or commercial sites – for housing construction. There also needs to be more building upwards, especially along old city access roads, which have often only been built on at a low level to date.
A study commissioned by Berlin Hyp puts the potential for redensification in German cities at around 625,000 additional flats, particularly in neighborhoods from the 1950s and 1960s.
Just is also calling for a rethink of building regulations: He is in favour of making regulations such as parking space statutes or overly stringent noise protection requirements more flexible if affordable living space can be created as a result. He sees serial and modular construction as the key to sustainably reducing construction costs and being able to react more quickly to demand.
Alternative housing concepts also play a role: Co-operative housing can guarantee stable rents in the long term. Housing exchange programmes that motivate older people to make larger flats available for families are another possibility – even if they are not yet very widespread in Germany.
Many cite the city of Vienna, which provides a large proportion of the population with affordable rental flats through consistent public housing construction, as a frequently cited positive example. In recent decades, the Austrian capital has made massive investments in public housing. However, Professor Just takes a differentiated view of this model: Although the municipal housing stock enables more people to live affordably, a side effect arises on the free market, he says. “It can only help everyone if everyone has access to it,” emphasises Just. Those who are not entitled to subsidised housing will have to find it on the private housing market – where rents could rise even more than originally expected.
At the same time, however, Just warns against relying too heavily on rent controls: Hard rent caps would not create new flats in the long term but would rather lead to a distribution battle in the existing housing stock.
Political will – or empty promises?
The new federal government of Germany has set itself ambitious goals: Housing is to become more affordable, more available and more environmentally friendly. In the coalition agreement, it announced, among other things, a “housing construction turbo” and the goal of permanently reducing new construction costs to below 15 euros per square metre.
Tobias Just sees this as a fundamentally positive approach – in particular the combination of regulatory policy with measures to increase supply. However, the decisive factor will be whether it is possible to simplify building regulations and facilitate investment in new housing. He urges patience: “The government must be measured against its own targets, such as the legislative plans announced within the first 100 days. Whether the balance between necessary environmental requirements and affordable new construction will succeed remains one of the biggest challenges.
Lisa Obst’s Erasmus semester in Barcelona ends in a few months, but whether she will be able to live in a European metropolis again afterwards is written in the stars. The big political promises have been made. Whether words actually turn into flats remains to be seen.
RESEARCH | ARTICLE © Felix Giltmann and Julian Dak | Jade University of Applied Sciences, Wilhelmshaven, Germany
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