Europe's housing crisis demands supply-side solutions – Bulwiengesa

A new study by bulwiengesa, commissioned by Berlin Hyp, reveals that the housing crisis is a widespread European issue, not one confined to Germany.

Sascha Klaus

The study compared housing markets in Germany, Poland, France, the Netherlands, Spain, Denmark, and the UK. It found that since 2020, rents in major urban centres have risen noticeably in highly regulated markets (those with rent brakes, caps, or points-based systems) and in liberal systems with fewer interventions.

Demand for housing is outpacing the supply of new construction and building permits. This mismatch leads to strained markets and either sharp rent increases or already prohibitively high rent levels.

While the nations vary significantly in home ownership rates, regulatory intensity, and the size of their housing deficits, they share a core structural problem. Political regulation cannot compensate for a fundamental lack of supply caused by insufficient construction, demographic shifts, and urban concentration.

Germany: Low home ownership rate (47%), large rental market, high regulation (rent brakes/caps), yet severe supply shortages in metropolitan areas.

Poland: High home ownership rate (87%), significant estimated deficit (1.5M homes), landlord-friendly regulation.

Spain: High home ownership rate (74%), shortages in metropolitan areas, partial rent limits that have not stopped rising rents.

Netherlands: Extensive points-based rent control system, estimated deficit of 400,000 homes, disincentives for landlords.

France: Highly concentrated on Paris, where strict regulation keeps rents stable but very high. This approach reduces investment incentives and fails to address the core supply/demand imbalance.

Denmark: Strained market, particularly in Copenhagen, with a strong social housing sector but limited supply in sought-after locations.

United Kingdom: London faces a housing emergency with very high rents; regulation is shifting toward stronger tenant protection.

Three Key Takeaways

Both tightly regulated and more liberal markets are facing the same crisis.

While rent controls provide short-term relief, they often lead to reduced investment, lower construction levels, or the withdrawal of units from the rental market.

Frequent regulation changes undermine planning certainty, slowing new construction and modernisation, which can exacerbate the housing shortage long-term.

The Path Forward

Rather than introducing isolated rent interventions, regulators should implement instruments that are regularly evaluated for their impact on construction, existing stock, social structure, and the investment climate.

The primary solution must be to increase the available housing stock. This requires accelerating planning approvals, designating more building land in growth regions, and supporting the conversion of suitable existing properties for residential use.

Sascha Klaus, CEO of Berlin Hyp, commented: “Housing is in short supply in many European metropolitan areas and is increasingly becoming a constraint for broad sections of the population. Regulation can provide short-term relief, but without sufficient new construction and a reliable investment environment, it cannot create a sustainable solution. A future-proof regulatory framework should aim to strike a balanced relationship between tenant protection, the functioning of markets and the expansion of housing supply.”