Housing is increasingly becoming one of the most critical economic and social challenges in Europe. According to the European Investment Bank (EIB) Investment Report 2024/2025, the continuous increase in house prices and rents over the past decade has disproportionately affected certain population groups, especially young people, low-income families and people moving to cities for work or study.
In fast-growing cities and tourist destinations, the pressure is even stronger. Cities like Dublin and Lisbon have seen house price increases of 50% to 100%, rates that significantly outpace local wage growth, making housing unaffordable for a large portion of the working population.
Increased pressure in the coming years
Supply and demand forecasts indicate that pressure on the housing market is expected to increase further, as the population continues to shift from rural areas to cities, while the average household size is decreasing. Rising construction costs, high interest rates, and a chronic lack of innovation and investment in the construction sector have directly contributed to the increase in housing prices.
These developments hit the most vulnerable groups hardest: low-income families, students, as well as seasonal workers or those in essential services, who often fail to find quality housing at market prices.
Housing and the labor market: a key link
The EIB stresses that access to affordable and quality housing is essential for labour market participation and for addressing regional labour shortages. In areas of rapid economic growth, the lack of affordable housing hinders the relocation of workers, especially young people, limiting the efficient allocation of labour.
A dynamic housing market would allow workers to move to where they are most productive and where wages are highest. Conversely, when companies are forced to raise wages to compensate for high housing costs, labor costs increase and their competitiveness is harmed.
At the macroeconomic level, a flexible housing supply can translate into higher GDP and productivity growth, as well as reduced wage and wealth inequalities.
Long-term consequences for vulnerable groups
The report highlights that even temporary housing difficulties can have long-term consequences on access to the labor market. More specifically, individuals who have experienced housing difficulties have significantly higher unemployment rates compared to those who have never had housing problems, and this effect persists five years later, regardless of whether the problems were financial or related to family issues.
Another major problem is related to the high initial costs of energy-efficient renovations, which are often unaffordable for low-income households and small-scale homeowners. As a result, these groups fail to invest to reduce their energy bills, entering a vicious circle of high costs and poor living conditions.
Students and the future of the workforce
The housing crisis is also directly affecting higher education. Families are increasingly struggling to financially support young people attending university, as housing costs account for a large share of total expenses, especially for students who have to move to expensive cities. The inability to move limits access to quality education and can have long-term consequences for students' professional development, further reducing the supply of qualified labour for European businesses.
The situation in Albania
Although the report does not directly mention Albania, the data shows that pressure on housing is increasing significantly, becoming a factor that directly affects labor mobility and educational opportunities.
Data shows that apartment rents continue to increase, with the average price of a one-room apartment around 56,000 ALL per month in Tirana and a range reaching up to 70,000 ALL and more for better apartments in prime areas of the capital, according to the current rental market.
Moreover, the housing rental price index has increased to around 6.6% at the end of 2025, reflecting increased demand and pressure from tourism and urban migration. On the other hand, housing prices have increased by over 40% in the last 12 months and around 90–140% in the decade, according to real estate market indicators, quickly outpacing consumer price growth in the rest of the economy.
In this context, as the European Investment Bank also highlights, the lack of affordable housing, even if temporary, is linked to low employment rates and restrictions on employment mobility, an effect that can also be reflected in the Albanian market, where young people and families with lower incomes face obstacles in accessing housing and professional development opportunities./ekofin.al
