Rising real estate prices are exacerbating Europe's housing crisis.

Europe's housing crisis has been exacerbated by historic increases in interest rates, inflation and speculation in the real estate market. House prices in the European Union increased by 46.9% from 2010 to the fourth quarter of 2022. Over the same period, accumulated inflation amounted to 29.6%.

The main reason is that in recent years European governments have provided various tax incentives for foreign investors and real estate owners. The measure attracted billions of investments in the sector and created a financial bubble influenced by speculation in the real estate market. As a result, real estate prices in the countries have gradually and dramatically increased. According to Eurostat, real estate prices in 24 of the 27 EU member states rose more than inflation each year from 2016 to 2021.

The average wages of workers in Europe have not increased at the same rate as prices. Over the fourth quarter of 2022, EU household income rose by 2.5%, while house prices rose by 3.6%. According to a study by the National Bank of Hungary based on Eurostat data, to buy an apartment with an area of 72 sq. km. meter in some European capitals -, wages for 20 years.

With rising rent prices and the difficulty of obtaining credit due to high interest rates, people are forced to move away from the center and into the suburbs, resulting in longer travel times by public transport and a lower quality of life.

The impact on immigrants

Economist Newton Marques from the University of Brazil told Poder360 that the housing crisis could affect especially immigrants who have moved to Europe and earn low wages, such as Brazilians. "There is such a possibility [of Brazilians returning to Brazil], there is already even a movement of people who want to return because the cost of living has started to rise and they are not finding work," the economist explained.

According to the latest data from the Brazilian Community Abroad study, published last year by the Ministry of Foreign Affairs, by 2021 there will be 1.3 million Brazilians living in Europe. Most of them are concentrated in Portugal and the UK.

Measures taken in different countries

Some European countries are taking action to address the problem. For example, in Portugal, the government discontinued the Golden Visa program in February of this year, a program that grants residency permits in exchange for investment in the country. Portuguese Prime Minister Antonio Costa said the government also plans to regulate rental growth and provide tax breaks to owners who choose to rent out properties rather than use them for tourist accommodation. New signups on apps like Airbnb are not allowed. In Spain, the government has capped rental cost increases at 2% per year.