Tackling Europe’s housing crisis: why insurers are part of the solution
Europe is facing a housing crisis. Even though housing policy remains largely a national competence, policy makers have rightly decided to act at EU level to complement Member State efforts. German insurers welcome this initiative and stand ready to help, as large institutional investors, as risk managers, and as long-term partners committed to sustainable and affordable housing markets.
In March 2026, the European Parliament adopted its position on tackling the EU’s housing crisis, calling for measures such as tax incentives for renovation, cutting red tape in the construction sector and mobilising additional public and private investment. The vote shows that housing affordability has become a European concern, affecting competitiveness, social cohesion and resilience across the EU.
The European Commission’s Communication on a European Affordable Housing Plan is therefore an important step. In Germany alone, the housing shortage has reached an estimated 1.4 million homes. Across the EU, more than two million new homes per year are needed, at a projected annual cost of €150 billion. Public funds alone will not be enough.
Insurers as supporters of affordable housing
Insurers can help close this gap. As of the end of 2024, German insurers held investments of around €1.9 trillion, including approximately €22 billion in housing. With their long-term investment, they can provide stable financing for affordable and sustainable housing.
The German insurance industry supports the Plan’s focus on boosting productivity and innovation in construction, reducing administrative burdens and accelerating permitting procedures. Construction costs in Germany rose by 64% between 2012 and 2022, creating uncertainty for private investors. Measures that enhance digitalisation, enable greater standardisation and streamline permitting processes, can lower costs and improve predictability, while maintaining important legal and environmental standards.
Mobilising private capital also requires better visibility and scalability of projects. A Pan-European Investment Platform for Affordable and Sustainable Housing could facilitate public-private partnerships, enable risk sharing and make investment opportunities clearer and more accessible to investors.
Climate resilience as a focal Point
At the same time, climate resilience and insurability must be central to EU housing policy. Climate-resilient and energy-efficient buildings reduce future damage and reconstruction costs, stabilise insurance premiums and safeguard long-term affordability. Instruments such as climate and natural hazard risk assessments for new projects and major renovations can strengthen the resilience of Europe’s housing stock.
Finally, simplifying the legal requirements for the provision of cross-border construction liability insurance through the planned Construction Services Act would remove unnecessary barriers and help increase construction capacity across the EU.
Conclusion
The housing crisis is European-wide and demands a coordinated response. With their substantial investment capacity, expertise in risk management and strong interest in long-term resilience, German insurers are ready to contribute. If implementation of the Affordable Housing Plan delivers genuine simplification, stable investment conditions and a clear focus on climate resilience, the insurance sector can be a key partner in making affordable housing a reality across Europe.