Economy, Europe

Housing shortage in major European cities causes record rent hikes

Expenditures of families on housing and heating exceed 50% of their monthly income in some European provinces

Anadolu Staff  | 04.05.2023 - Update : 05.05.2023
Housing shortage in major European cities causes record rent hikes


While the imbalance in housing supply and demand in major European cities is causing record increases in rental payments, rising construction costs due to high inflation and interest rates are worsening the situation.

Although governments try to find solutions such as limiting the rise in rents in the European continent, where half of the population live in rent in some countries, it is predicted that high inflation will continue to suppress the rent and housing prices.

According to research by Eurofound, an institution affiliated to the EU, while especially private sector tenants are experiencing housing insecurity, high inflation, rising interest rates, and increasing construction costs are exacerbating the housing shortage.

The expenditures of families on housing and heating exceed 50% of their monthly income in some provinces.

As the pressure on rents has increased tremendously in recent months with immigration from Ukraine, those looking for flats to rent in big cities, such as the German capital Berlin, need should be prepared for a months-long stress test.

In many European cities, from Berlin to London, families see buying a house as "impossible."


In Germany, which has a population of 84 million, around 700,000 new residences are needed to alleviate the pressure on the real estate market.

The housing shortage in the country is at its highest level in 20 years due to rising construction costs, high interest rates, and an influx of refugees.

According to experts, construction investments are less attractive in many areas and that the sharp increases in construction prices and interest rates in recent months have negatively affected many construction projects, causing the housing shortage to reach its highest level in 20 years.

The arrival of Ukrainians to Germany, after the start of the Moscow-Kyiv war on Feb. 24, 2022, caused an additional demand for 200,000 housing units.

In Berlin, the state government held a referendum to expropriate thousands of houses from real estate companies due to protests against rent increases. Some 56.4% of the voters said "yes" for the expropriation of more than 240,000 apartments.

The companies own more than 550,000 residences worth €100 billion in Germany, where half of the population lives on rent.

Average rents in the capital Berlin have increased by more than 100% since 2010, while new apartments being rented for at least €26 per square-meter.


In the Austrian capital Vienna, where rents have risen sharply due to the increase in housing demand, the rental cost per square meter for an apartment varies between €17 and €20.

While many low incomers live in state-backed council housing in Vienna, registrations for these housing units with increasingly longer waiting times have increased by 26% in the last three years.


Denmark amended its laws to make it harder for institutional investors to significantly increase rents when purchasing real estate, while the government passed the so-called "Blackstone Act" three years ago, aimed at curbing rent rises.

The US real estate giant Blackstone had bought tens of thousands of apartments in Denmark in previous years, while tenants complained about the lack of repairs and heavy rent increases of over 100%.

The group also tried to persuade tenants to terminate the lease by paying severance pay.

The Blackstone Act now prohibits landlords from increasing the rent for five years after purchasing the property.

The law was celebrated as a "landmark" against excessive rental costs in Denmark, while Blackstone said the company makes up only 0.5% of Copenhagen's rental market.

Despite this move, the housing constraint in the city did not disappear.

In Denmark, a quota for affordable housing is also planned, and 25% of apartments in new buildings are planned to be rented at reasonable prices.


Rent is the most important monthly expenditure of the French people.

Increasing housing prices in the capital Paris have pushed low- and middle-income families to the suburbs over the years, making it difficult to find rental housing.

The report, published on Feb. 1 by the France-based charity Abbe Pierre Foundation, revealed that as of 2022, 4.15 million people in the country were struggling with housing problems or living in inhumane conditions.

According to the report, the number of homeless people in France has increased to 300,000 and this rate has increased by 140% in 10 years.

French President Elisabeth Borne said last week that she wants to make it easier for all citizens to access housing in areas where supplies are short by easing financing facilities, even with 0% interest rate.

The Netherlands

The housing shortage in cities such as Amsterdam, Utrecht, The Hague and Rotterdam, which receives the most immigrants and is populated by students and tourists, continues.

The government's inability to meet the increasing housing needs causes protests every year.

In Amsterdam, where large-scale protests were made against the housing restriction, the demand for room rental increased rapidly, especially after the COVID-19 pandemic.

The rent for a room in the city is around €800-900.


In the UK, one of the countries with the highest housing constraints and rent increases in Europe, the average rent of a house increased by 9.4% in the first quarter of this year, reaching £1,190 ($1,494).

According to data from the British online real estate company Rightmove, the average rent in the capital London hit an all-time high at £2,501 per month, up 14% over the same period.

The number of rentable houses in the UK real estate market is 46% below versus the 2019 level.


In Spain, the government seeks measures against the increasing housing problem every year, intervening in the rent increases for the first time in the country's democracy history.

According to the housing bill adopted in the parliament, the rent increases will be limited to 2% in 2023 and 3% in 2024 instead of the inflation.

In addition, property taxes for residences that have been vacant for more than two years will be increased by up to 150%.

Also, Prime Minister Pedro Sanchez promised to build a total of 113,000 houses in three separate projects for affordable renting for young people and families in financial difficulties.

The housing problem in Spain is experienced in the cities of Madrid and Barcelona, which host the highest number of immigrants, students, and tourists.

It is calculated that only one room's rent is between €500-600 in these cities and the demand for room rents has increased by 40% compared to last year.


With the economic crisis in Greece after 2009, a serious decrease was observed in real estate sales prices and rents in the 2010s, but this situation has been reversed in recent years.

The increase in rental prices in the country in the last five years has exceeded 30%, and this increase will continue in 2023 and will be between 3% and 7%.

The short-term rental method is seen as one of the reasons for the increase in rental prices in Greece.

Especially in the crisis period, the short-term rental of houses for tourism purposes, which are bought cheaply from the central regions, especially the capital Athens, and renovated, causes a decrease in the supply and an increase in rents.

* Writing by Gokhan Ergocun from Istanbul

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