The European Commission has presented the first European Plan for Affordable Housing, a coordinated response to the continent’s deepening housing crisis. The proposal aims to expand the supply of homes, support investment and reforms, regulate short-term rentals and reinforce social protection for groups most affected by rising costs.
According to the Commission, housing prices across the EU have increased by more than 60 percent over the past decade, while rents have risen by more than 20 percent. The issue now affects labour mobility, access to education, demographic trends and overall economic competitiveness. The plan seeks to add European value by strengthening the capacity of member states, regions and cities to act. It mobilises €43 billion in financing, and each member state, including Cyprus, is required to submit a national action plan by the end of the year.
Interior Minister Konstantinos Ioannou, who will chair the relevant Council formation during the Cypriot EU Presidency, welcomed the plan as the culmination of months of coordinated work at EU level. He said Cypriot policies already in place could inform concrete EU-level solutions, particularly for young people and low and middle-income households.
The plan’s central elements include a European Strategy for Housing Construction. This involves measures to modernise and speed up the building and renovation sector, including simpler planning rules and faster permitting. Revised state aid rules now make public funding for social and affordable housing easier. A legislative proposal on short-term rentals aims to support cities under pressure from platforms such as Airbnb, where long-term housing supply and rents have been disrupted.
The Commission has also activated €43 billion for housing projects and is preparing a European investment platform with the European Investment Bank and national development banks. The aim is to channel capital into affordable and sustainable housing. The plan integrates the New European Bauhaus initiative, connecting the Green Deal to better, more efficient and more affordable built environments. Additional pillars include student housing, social housing and Housing First programmes for homelessness. The framework will be supported by a new European Housing Alliance and the first EU Housing Summit in 2026.
Cyprus faces its own pressures. Although increases are more moderate than in some countries, the Central Bank’s House Price Index rose by 5 percent in the third quarter of 2025. Apartment prices climbed by 6.4 percent, while house prices grew by 2.6 percent. Limassol and Larnaca recorded the strongest acceleration, while Nicosia and Famagusta posted marginal declines. Paphos showed slower but still high growth at 8.9 percent.
The government has already launched several schemes, including Build to Rent and incentives to increase housing supply, targeting around 1,900 new units with a portion set aside as affordable. The Renovate to Rent programme seeks to bring empty buildings back into use. Subsidies for buyers under 41 in specific areas have attracted strong interest. Student housing remains a major gap, with limited beds and slow progress on large-scale expansions.
The EU plan aligns with Cyprus’s ongoing efforts and opens the door to additional financing. Through the new investment platform with the EIB, Cyprus could accelerate municipal and social housing projects, student accommodation and energy-efficient renovations, drawing on technical support to fast-track studies and permitting.
Revised state aid rules allow Cyprus to design subsidised loan or guarantee schemes for young people, low-income groups and vulnerable households, using the Housing Finance Corporation as an implementing arm. The New European Bauhaus can support targeted urban regeneration, particularly in older city centres, with a focus on low-cost renovation, green materials and rapid upskilling in the construction sector.
A national Housing Alliance could coordinate ministries, municipalities, universities, social housing providers and private actors to increase supply through standardised designs, common tender platforms and stricter deadlines for approvals. A combined EIB-cohesion-NEB package could also help close the gap in student housing by enabling a series of smaller, fast projects in collaboration with municipalities and universities.
Existing Cypriot schemes can be expanded or co-funded through EU channels, provided they incorporate affordability criteria such as rent caps and income thresholds. Home-ownership subsidies for young people could be linked to energy renovations to reduce long-term costs and improve sustainability.
The government is now expected to translate the European framework into a national action plan, setting priorities for new construction, renovation, social housing, student accommodation and regulatory reform.