Industrialized construction to the rescue of the housing crisis

The housing crisis has evolved from a local issue into a structural problem across Europe. This is the conclusion reached by the European Commission, which is preparing a European Affordable Housing Plan that includes deep fiscal reforms to finance affordable housing, after acknowledging that current public resources are no longer sufficient.

The diagnosis is clear: purchase and rental prices have risen far faster than wages, particularly in major cities such as Barcelona and Madrid, where housing absorbs one of the highest shares of average income in the EU. Against this backdrop, the Commission’s advisory experts argue that part of the wealth generated by real estate assets over recent decades should play a more direct role in addressing the crisis.

The proposals focus on increasing taxation on certain forms of real estate wealth, including large housing-related inheritances, capital gains from land reclassification, and the long-term holding of vacant urban land or underused buildings in high-demand areas. The underlying rationale is that much of this value growth stems not only from private ownership, but from public investment in infrastructure, services and urban development.

Rather than simply raising taxes, the Commission stresses the need to redirect these revenues so they are automatically and transparently allocated to housing policies. This would create a more stable and predictable funding base for expanding social and regulated rental housing, less exposed to economic cycles.

Another central pillar of the report is the regulation of short-term tourist rentals, which are identified as a major factor reducing housing availability and pushing rents higher in stressed urban areas. The experts recommend stronger permit systems, zoning rules and monitoring tools, as well as the creation of dedicated funds—financed by tourist rental platforms—to tackle homelessness and housing exclusion.

At the same time, the Commission promotes the expansion of cost-based rental housing, where rents are set according to actual development and operating costs rather than market prices. This model is designed to attract long-term institutional investment with capped returns and position affordable housing as a form of social infrastructure.

Although no specific legislative timetable has been announced, the message is clear: the European Union now recognises that the market alone cannot solve the housing crisis. More decisive intervention will be required in areas such as taxation, land use and rental regulation. In countries like Spain, this debate directly intersects with ongoing discussions around inheritance tax, vacant housing surcharges, urban value capture and the urgent need to scale up affordable housing supply.