Housing Crisis an Urgent European Challenge, Warn Costa and Lagarde
The rising cost of housing is becoming one of Europe's most significant social and economic issues, according to top European leaders. Both European Central Bank (ECB) President Christine Lagarde and European Council President António Costa have emphasized the urgent need to find solutions as high home prices continue to hinder access to housing, especially for young people. The issue is now firmly on the European political agenda, with debates scheduled at the highest levels of the EU.
Speaking at the Porto Social Forum 2025, António Costa identified affordable housing as "one of the most urgent challenges in the Member States," as reported by Jornal de Negócios. He confirmed that the topic is slated for discussion at the European Council meeting in October. Costa, the former Prime Minister of Portugal, stressed the foundational importance of housing, stating, "there can be no decent work, nor quality of life without dignified and fair access to housing." He described the problem as a structural threat to social cohesion that also fuels populist movements.
In a separate interview with Danish radio DR, Christine Lagarde echoed these concerns, noting that the problem is widespread across many economies, "especially in the euro area and with greater intensity in the capital markets." The ECB President argued that the root cause of the crisis is not merely the recent rise in interest rates but rather a deep "structural imbalance between supply and demand." She specifically pointed to a lack of new construction and a shortage of public housing as key factors. Lagarde also stated that "it is not correct to establish an automatic link between interest rates and house prices," and called on national governments to implement policies that increase supply to control price escalation.
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The European Commission is also taking action. António Costa noted that the Commission, led by President Ursula von der Leyen, is preparing the first European plan for affordable housing, which is expected to be announced this year. With a significant portion of Europeans' income being spent on housing costs, the issue has gained prominence in Brussels. Both Lagarde and Costa agree that an effective response will require concrete actions, including a substantial increase in construction, the implementation of effective public policies, and greater engagement from younger generations demanding solutions.
The coordinated statements from two of Europe's most powerful figures signal a new level of political will to address the housing crisis. This could lead to a series of new policy initiatives and funding programs at both the EU and national levels aimed at increasing the housing supply across the continent, including in Portugal's strained market.
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