LÓPEZ PLANA'S EUROPEAN COMPASS

Europe, caught between housing and fragmentation

"If Europe wants to break the vicious circle—failure in housing → mistrust → fragmentation → political incapacity → further failure in housing—it needs to combine three ingredients," warns Marc López Plana in his weekly European Compass. "A broad political consensus on housing as a right. Stable majorities and long-term commitments," he concludes.

Marc López Plana 3 de noviembre de 2025

Housing affordability and accessibility are cross-cutting issues in Europe. | Unsplash / K.C. Schum

"Those who suffer the most vulnerability in housing are also most willing to vote for new or relatively radical options," said Joan Rodríguez Teruel, director of the Centre d’Estudis d’Opinió (CEO) of the Generalitat de Catalunya. That remark caused me to reflect on the question that informs today’s European Compass: If the solutions to our housing problems require stability and consensus, why does European society keep voting for fragmentation?

"In European cities, purchase and rental prices are skyrocketing, putting housing beyond the reach of large segments of the population"

In the cities of Europe, it’s not hard to see the cracks now running through the democratic system: from Amsterdam to Barcelona, from Prague to Tallinn, skyrocketing rental and purchase prices have put housing out of reach for large segments of the population. At the same time, the political system is fragmenting: traditional parties are no longer dominant, coalitions are weakening, and voters are increasingly divided. Those two phenomena aren’t disconnected. When housing issues run up against slow and complex politics, trust is eroded and the vote is dispersed, making structural solutions all the more difficult.

Pressure on housing

Let’s glance at the numbers. According to the European Economic and Social Committee (EESC), between 2015 and 2023, average prices for house purchases and rentals in the EU increased by around 48%. Over one-tenth of urban households already allocate more than 40% of their disposable income to housing. These numbers point to a social emergency: homes are becoming less a refuge than a source of anxiety and financial vulnerability.

In the cases of Spain, Italy, and the Netherlands, the gap between housing prices and income has reached levels that "put social cohesion and inclusive growth at risk," according to the European Commission. Access to housing is among the most significant determinants of inequality in today’s Europe.

Pressure on democracy

That citizens might feel frustrated about housing is one matter; that they believe their political system incapable of response is another. The president of the EESC has warned that the "cost-of-living crisis" — in which housing plays a central role — constitutes "a major threat to confidence in democracy and in Europe’s ability to act."

"This lack of confidence is reflected in political behavior, with greater party fragmentation and the emergence of many niche offerings"

That deficit of confidence is reflected in political behavior. In Europe, party systems are fragmenting: larger numbers of small parties, more niche offerings, less dominance by broad-based factions. According to data from 'Who Governs Europe' and 'EuropeElects', the number of political parties has grown steadily across the past decade. In the European Parliament, total representation by the two largest groups (center-right and center-left) dropped from roughly 66% in the 1999-2004 legislature to around 45% following the 2019 elections.

The result: the creation of ambitious and durable policy has become much more difficult. The search for majorities is now an exercise in variable geometry, and major reforms (such as those that housing requires) are being diluted by short-term horizons and fragile coalitions.

The paradox of urgency and fragmentation

Here’s the paradox. Solutions to the housing crisis entail long-term planning: land reform, public investment in affordable units, regulation of rentals, urban renewal programs. Such initiatives require multi-year commitments, inter-party cooperation, and political stability.

But the electorate, which is already feeling housing pressures, wants immediate relief. Votes that were once an endorsement of long-term projects are now an instrument of protest — an emotional outlet, not an approval of future architecture. The urgency favors further splintering, and the voter now looks for a party with an 'instant solution' rather than a 'ten-year plan'. The result is a political marketplace with many options. Later, when some of those options win legislative seats but none achieves a clear majority, the sort of structural policy required to address the situation is apt to stall. Fragmentation does more than prevent the formation of majorities; it also changes the behavior of the major parties, which cease to function as stabilizing anchors. Instead, they act out of fear of losing voters on the margins.

In most of Europe’s democracies, the traditional forces no longer govern from a center broad enough to weave State agreements. Pressures from smaller parties (both right and left) have pushed them to compete for ideological niches, further reducing the potential for consensus.

"The major parties fear appearing too pragmatic or cross-party, because that can result in a loss of votes to more pure or radical options"

In that context, the larger parties are fearful of appearing too pragmatic or too transversal, either of which could provoke a flight of votes toward relatively radical or ‘purer’ options. The result is a political system caught between prudence and panic, incapable of designing even mid-term strategies and allergic to wide-reaching pacts.

Nonetheless, structural problems such as housing can’t be solved without State-wide accords. In the absence of consensus, housing policy becomes a never-ending experiment where each subsequent government starts anew, without continuity or scale.

The housing crisis as a failure of democracy

Let’s look at the housing crisis as an example of how democracy can fail under pressure. When young people are denied access to proper housing — when they live with their parents longer, or rent under abusive conditions — they don’t just suffer residential stress. They also lose faith in the democratic contract.

The idea that a decent life (with stable institutions and broad-based parties) can be secured through hard work begins to diminish. The Social Europe think-tank put it nicely: "A generation stuck in the housing market is a generation with less interest in the democratic order." The link between inaccessible housing and institutional distrust explains why votes have splintered while the capacity to govern and reform has weakened.

"The contemporary structure of European democracy makes the housing challenge even more difficult to resolve"

In a fractured political order, governments are less robust and coalitions tend to focus on the near-term. Political advances are more often incremental, modest, and reversible. Parties are incentivized to promise quick fixes rather than structural reforms. As a result, the very structure of contemporary European democracy has been making the housing challenge even harder to resolve.

Fragmentation and public goods

Political economists have observed this pattern for some time. By the end of the 1990s, Alberto Alesina had already shown that societies that were more fragmented by ethnicity, class, or ideology tended to invest less in durable public goods, from infrastructure to social housing.

When the preferences of voters diverge widely, their governments are less likely to find consensus on how to allocate resources, and who to benefit. The results include lower spending on collective policies and greater orientation toward visible, immediate benefits.

Housing is a perfect example of that dilemma. Adequate policy requires sustained spending, technical planning, and long-term returns — precisely what fragmented governments (under pressure from impatient electorates) tend to avoid. The more divided the vote, the lower the State’s ability to act as a public housing developer or price regulator.

In Alesina’s terms, political fragmentation doesn’t only reflect social divisions but also amplifies them, creating a vicious circle: less cohesion → less public investment → more inequality → more fragmentation.

Europe’s policy response: limited but emerging

The European Union is not entirely defenseless. While housing is still primarily a national concern, Brussels has begun to move. The European Commission has included affordable housing as a priority in its new social agenda. The chair of the European Parliament’s special committee on housing, Irene Tinagli, argues that "the EU can do much more than build new homes." Given sufficient political will, it can coordinate funds, boost the renovation of older buildings, and mobilize private investment.

But even here, fragmentation plays a role: national voters and party systems differ; coordination at the European scale comes up against national budgets and issues of sovereignty. Although proposed intervention by the EU has been mounting, it remains quite modest compared with the magnitude of the crisis.

"If Europe wants to break this vicious circle, it needs greater consensus on housing as a right, housing programs, and stronger local actors"

If Europe wants to break this vicious circle (housing failure → mistrust → fragmentation → political incapacity → new housing failure), three ingredients are necessary. First, we need broad political consensus on housing as a right. Second, we need stable majorities and long-term commitments, because housing programs depend on continuity beyond election cycles. And third, local actors must be empowered. Cities and regions are on the front lines of this problem; endowing them (financially and institutionally) can partly circumvent issues of national fragmentation.

If Europe wants to remain both credible and governable, it must maintain not only the roofs over its citizens’ heads but the institutional foundations beneath their feet.

Marc López Plana

Editor y director de 'Agenda Pública'

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