The European Commission wants to make housing affordable again. It can't. But the little it can do could encourage cities to do more.

Dan Jørgensen, the EU's commissioner for housing, told reporters that the legislation won't “lead to cheap houses for everybody in Europe”.

It will instead help cities to justify action against short-term rentals, second homes, or vacant dwellings. They could do that if an area is found to be under housing stress, meaning house prices and rental costs far outstrip local incomes.

Short-term rentals have boomed in cities popular with tourists. Listings on big platforms nearly doubled between 2018 and 2024. Central Madrid has around 40 such rentals compared to 100 available on long-term contracts, the Commission said.

Right now, these cities risk costly legal challenges, even if they've won cases against short-term rentals in court. Florence property owners and tourist groups lost a lawsuit against the city's clampdown on short-term rentals in May. Airbnb also lost its appeal against a Spanish fine over illegal listings in March.

Jørgensen said essential workers, such as teachers or police officers, are being crowded out of the housing market in cities where short-term rentals have increased.

What the Commission can do is help cities respond.

“If you do want to listen to your citizens that are worried, then it's up to us to make sure that it's not internal market rules” under EU law that prevent cities from taking action, he said.

However, short-term rentals are only 1.2% of all EU housing. One in five homes are empty, such as holiday homes.

Increases in housing prices and rents are a longer-term problem that will be hard to fix. House prices are up by more than 60% in the EU since 2015 and more than tripled in Hungary, Estonia, and Lithuania since 2010. Rents have climbed by a fifth on average and far more than that in Estonia, Lithuania, Hungary, and Ireland.

Income also hasn't always kept pace with rising prices. The Commission said people report that they are struggling. One in ten say they can't always pay their rent or mortgage on time.

All of this is far more acute for people on very low incomes. Social housing stock has declined and is now just under 7% of total housing.

Jørgensen acknowledged that the EU's affordable housing plan is limited. Since it would be up to cities to decide what they do, it's not possible to say how far it could reduce prices and make more homes available.

“We are very well aware that this is not a silver bullet that will solve all problems in Europe,” he said.