More populism than homes. Understanding the housing crisis

In Europe, the housing crisis is generating more demagoguery than homes. On Saturday, around 70,000 people marched in Madrid to demand that rents be halved and homes be expropriated from ‘vulture funds’, the day after Congress had rejected the decrees proposed by Prime Minister Pedro Sánchez following the ‘Maricarmen case’ (the 87-year-old woman evicted from the home where she had lived for seventy years), which would have suspended evictions of vulnerable people without alternative accommodation until 2030. Yet in the preamble to one of the two decrees, the government stated, citing the Bank of Spain, that the country needs 750,000 new homes, but political rhetoric has shifted the debate towards evictions rather than the housing shortage. Today, it is primarily the radical left that is leading the protest against investment funds and large property owners.

But the populist right has also been exploiting this same anger for years, linking the housing shortage to immigration and, where it holds the balance of power in government, has already moved from slogans to legislation: in July, in the Valencian Community, the People’s Party, together with Vox, passed Law 5/2026 introducing ‘national priority’, which, when allocating social housing, favours those who can demonstrate ‘genuine, lasting and verifiable roots’ – that is, years of residence and tax contributions – at the expense of those who may have arrived only recently. In the Netherlands, Geert Wilders’ far-right Party for Freedom won the 2023 elections by promising to strip refugees of their priority in social housing, even though, according to the Dutch statistics office, in 2021 they accounted for only 6 per cent of social housing units that had become available, compared with a shortfall of 400,000 homes estimated by Wilders’ own party. In Ireland, where the government claims there is a shortfall of hundreds of thousands of homes, in November 2023 far-right groups exploited the stabbing of three children in Dublin to spark – under the slogan ‘Ireland is full’ – the worst riots the city had seen in decades. Finally, in May, the Constitutional Court struck down the law passed by the Lega-led regional government of Friuli-Venezia Giulia, which required five years’ residence out of the last eight to qualify for social housing, on the grounds that the length of residence does not measure housing need and that the rigid requirement prevented the economic circumstances of applicants from being assessed.

According to the June 2025 Eurobarometer survey, 51 per cent of residents in European cities consider the lack of affordable housing to be an urgent problem. David Adler and Ben Ansell attempted to explain this in their 2020 paper “Housing and populism”, concluding that a home is a household’s main asset and that its value indicates whether the place where one lives is growing or declining. Thus, those excluded from property gains – or who see their own home lose value whilst others appreciate – lose faith in the system that has produced this inequality, turning instead to those who attack the elites, as in the 2016 Brexit vote. Today, they are joined by those in cities who cannot afford to buy or rent, and the populists offer each group a scapegoat: the right blames immigrants, whilst the radical left blames landlords and property funds. To the extent that it would now be more accurate to speak of political speculation rather than property speculation. But neither expropriation nor giving residents priority over migrants is the solution. The problem with this polarisation is that it culminates in a vicious circle: the more populist rhetoric frightens off developers and landlords, the fewer homes are added to the available supply. And so prices rise, exasperating voters and making them susceptible to even more radical slogans.

For years, the issue has remained at the bottom of governments’ agendas, but now the majority of city dwellers regard the high cost of housing as an urgent problem. After all, according to Eurostat, more than two-thirds of Europeans live in their own homes, and the housing shortage has weighed most heavily on young people, tenants and newcomers. In recent years, rising interest rates and construction costs, planning restrictions and the slow pace of planning permission have hampered building projects and the conversion of unused properties into homes.

But with elections approaching (voting is due to take place next year in Italy, France, five German Länder and Spain – unless Sánchez calls an early election following Friday’s defeat), ‘immediate measures’ – such as a ban on evictions or restrictions on short-term lettings – could gain greater electoral support, even though they do not solve the problem of the housing shortage and simply shift the cost onto landlords or foreigners. Moreover, the European response has also been tailored to the level of the debate. The Affordable Housing Act, proposed by the Commission on 9 September, would give mayors the legal basis to restrict short-term lettings and even the sale of properties that are not primary residences in areas ‘under housing stress’, curtailing property rights on the basis of vague criteria, such as the ratio of prices to median income – a figure it is unclear how to measure at neighbourhood level. Yet the Commission itself acknowledges in the same proposal that these restrictions are insufficient to tackle the structural causes of the housing shortage – which can only be addressed by increasing supply – and that planning permission figures remain close to historic lows across most of the EU (one is led to wonder, then, why a proposal has been put forward that effectively sidesteps the solution – increased supply – by pursuing alternative avenues that do not result in more homes being built).

Let’s take the case of Spain. According to data from El País, the population has grown by over three million since 2015, mainly due to immigration. However, this significant increase in demand has not been matched by a proportional increase in supply: in 2025, around 90,000 homes were completed, compared with 250,000 per year in the 1990s (i.e. before the property bubble of the 2000s). Or as the Financial Times puts it, over the last ten years fewer homes per capita have been built “than in almost any other high-income country”. Consequently, compared with 2015, buying a home costs 80 per cent more and renting one 87 per cent more, whilst 69 per cent of young people aged between 18 and 34 still live with their parents (compared with 52 per cent in 2010). In its annual report published in June, the Bank of Spain attributed the rise in prices to a lack of supply and estimates that between 2021 and 2025 a shortfall of 750,000 homes will have accumulated between new households and completed properties, due to a scarcity of land ready for development, slow urban planning processes and a shortage of workers. In March, experts from the International Monetary Fund had advised the Spanish government not to renew rent caps, which, according to initial data, had reduced the number of homes available for rent. Meanwhile, in May, the IMF itself had suggested speeding up urban development, simplifying planning permissions and reducing legal uncertainty. However, the response to the ‘Maricarmen case’ went in the opposite direction: it extended contracts due to expire by 2028 by up to two years and capped rent increases at 2 per cent (with some exceptions) until the end of 2027.

In Berlin, the policy of expropriation has made Die Linke – the successor to the SED, which governed communist Germany – the leading party in the 20 September elections. Mayoral candidate Elif Eralp wants to implement the 2021 referendum in which almost 58 per cent of voters called for the expropriation – with compensation, but below market value – of companies owning more than 3,000 flats, totalling around 220,000 homes (belonging to large groups such as Vonovia and Adler). The Kiel Institute, in a study dated 29 September commissioned by Berlin’s business associations, has refuted the argument point by point. Firstly, those flats are already let and would merely change hands; therefore, expropriation would not provide housing for any of those seeking it. The Kiel Institute warned that expropriation paid at below market value would deter investors across Germany, causing the banks’ collateral on those properties to lose value. Those financing new-build projects would demand a higher risk premium, as no one is willing to lend or invest where the state can simply expropriate a property by paying half its value. Furthermore, the €20.1 billion in compensation proposed by the developers – half of the €40.2 billion estimated value of the flats by Kiel – if spent on construction, could create up to 71,000 additional homes by 2045, which would result in rents under new tenancy agreements being up to 8.7 per cent lower than expected.

The debate on expropriation, as previously reported by Il Foglio, is now being attempted here by the Alliance of the Greens and the Left, with Marco Grimaldi reportedly seeing Sánchez’s decrees as “a very powerful signal for the whole of Europe”, and so has proposed a ban on evictions for rent arrears through no fault of the tenant – that is, for those who cannot pay because they have lost their income – and the ‘temporary expropriation’ of vacant properties owned by large property funds. It is a pity that, between expropriation and the eviction freeze, no consideration is given to the risk of exacerbating the root cause of the crisis (the shortage of homes on the market), because a landlord is more willing to let a property if they know they can reclaim it should the tenant fall into arrears. In any case, there is also a lack of creative thinking: reducing the shortage of supply also means converting offices – which have become obsolete due to hybrid working – into homes. But in Italy, this change of use remains slow and uncertain: in Milan, only 11 per cent of the office space bought and sold has been earmarked for conversion, compared with 17 per cent in Madrid. This also highlights the limitations of Spanish policy: whilst conversions in the capital were increasing the number of available homes, the Sánchez government focused the national debate on the eviction moratorium.

The housing crisis in Italy affects large cities in particular. According to the Observatory on Italian Public Finances, property prices in Milan have risen by 56 per cent over the past ten years, and according to Cassa Depositi e Prestiti, rent in the Lombard capital accounts for 76 per cent of the average net wage, compared with the national average of 35 per cent. More generally, the trend outlined in the Istat forecasts published in August – which suggest that the number of households (including single-person households) will rise from 26.7 million in 2025 to 27.9 million in 2043 – leads to the conclusion that there is a need to increase supply. However, according to preliminary Istat data, planning permission for new homes between 2024 and 2025 has fallen by 4 per cent. The government has acknowledged the problem with the ‘Piano Casa’ (Housing Plan), which promises around 100,000 homes over 10 years through a combination of public intervention and private investment. However, the most immediate and achievable short-term solution concerns social housing that already exists but cannot be allocated (around 60,000 homes to be brought up to standard through refurbishment and maintenance). The remaining 40,000 or so homes are expected to come from social housing built by the private sector. This is certainly a starting point, but it is not enough given the 1.2 million additional households expected over the next 18 years.

In short, to reduce the price of a scarce commodity, one must increase its supply. The radical left promises to redistribute existing homes, whilst the populist right wants to restrict who can access them, but neither solution adds the housing that is lacking. The way forward is to build new homes, refurbish those that are uninhabitable and convert unused buildings in areas where demand is growing.