Construction and Renovation in the EU Housing Markets: Challenges and Opportunities to Ensure Affordability

The construction sector plays a key role in fostering economic growth and in ensuring housing affordability. However, the sector faces many challenges. Designing a framework that allows for productivity growth is essential, especially since the labour force is shrinking. Moreover, solutions have to be found for the land shortage issue and the disincentives to renovations for older or low-income households, which are unable to bear investment costs. This in-depth analysis discusses the key challenges of constructing new residential dwellings and renovating existing ones, discusses implications for housing affordability, and presents policy recommendations to address these issues. Housing rehabilitation is also briefly discussed.