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European democracies in the toughest test: Who do governments work for, citizens or hedge funds?
The housing crisis in Europe is no longer a social problem, but a direct political threat, just like Russian aggression against the continent. This warning was recently made by the mayor of Barcelona, Jaume Collboni, who stressed that the inability of European democracies to solve the housing crisis is leading citizens towards radicalism and political disillusionment.
From Dublin to Milan, the housing crisis is financially devastating European citizens. Housing prices have become unaffordable for most, while rents are taking up to 50% of ordinary citizens' monthly incomes. In European capitals, rents have increased by over 10% in the last year alone, forcing citizens into increasingly difficult and precarious living conditions.
While citizens suffer, financial institutions celebrate. In the last decade, institutional investors have tripled their home purchases in Europe, reaching dizzying levels. In Ireland alone, half of the homes built since 2017 have been purchased by investment funds. In Berlin, these investors now own 10% of the total housing stock.
The social consequences are dramatic. As financial institutions have grown in power, housing prices and rents have exploded, causing mass evictions and social despair. This reality is fueling political extremism, as recent election results in Germany and the Netherlands show, where radical parties are gaining ground precisely by promising to solve the housing crisis.
The big beneficiaries of this situation are financial giants, such as Blackstone, who consider the European housing market a very profitable asset. These investors are not at all interested in building new housing or solving the crisis; on the contrary, the fewer homes, the higher the price.
European governments remain captive to private capital interests, offering subsidies and tax breaks to speculators while weakening tenant protections and building regulations.
However, civic resistance is growing. In Madrid, in 2024, over 150,000 citizens took to the streets to protest the housing crisis. Berlin voted to expropriate housing from large investors, but pressure from financial lobbying has blocked the implementation of this measure.
If Europe does not react urgently, the political and social consequences will be devastating. It is time for Europe to regain control over housing, putting social interests ahead of financial ones. Otherwise, the continent is threatened by an unprecedented wave of political extremism./ Pamphlet
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