E sono i giovani a pagare il prezzo di questa trasformazione
When you take out a mortgage, are you buying a home, or are you buying debt?
Public debate on young people’s housing problem almost always revolves around the same narrative: low wages, job insecurity, different generational choices. A reading that shifts the problem onto individuals instead of looking for it in the system.
The system is the point.
And the system has a precise history, with an identifiable turning point and consequences that are now measurable in every European city.
The crisis in numbers
In the last quarter of 2025, house prices in the European Union rose by 5.5% year on year. Rents by 3.2%. In some countries the figure is far worse: Lithuania +88%, Ireland and Poland +76%.
Over the same period, wages did not move.
In some European regions, a young person on an average income would have to spend 60-70% of their net salary to rent an entry-level flat. The threshold considered sustainable is 30%. Twice the sustainable level has become the norm. This is not a temporary crisis, however. It is simply the result of decades of policies that have transformed the property market.
At the end of 2025, new housing supply in the EU met only 50% of actual demand.
And the shortage feeds on itself.
How the home became a financial asset
For much of the twentieth century, housing was a primary good.
The State treated it as such: public housing policies, first-home incentives, rent control, concessions for young buyers. The property market existed, but it was regulated around the social function of housing.
From the 1980s onwards, and at an ever faster pace from the 1990s, that logic was reversed. Housing was progressively reclassified as a financial asset: an investment instrument, a store of value, a vehicle for returns. Tax policy followed this reclassification.
Today institutional investors – pension funds, sovereign wealth funds, private equity firms – are primary players in the residential property market.
Multifamily properties returned an average of 8.2% a year between 2020 and 2024, outperforming offices, retail and industrial property.
That return attracts capital. Capital drives prices up. Prices rise regardless of the purchasing power of those who have to live there.
According to academic research, institutional investors enter markets using data analytics to identify the neighbourhoods with the highest returns, buy property at scale, raise rents through the market power that comes from concentrated ownership, and disproportionately hit neighbourhoods with falling incomes.
The result is a market that follows the logic of financial return, not the logic of housing need.
In Europe, between 2010 and 2024, the prices of homes rose by 53% on average. Over the same period, real incomes grew far more modestly. The property market and the labour market have decoupled.
One follows the logic of capital. The other, the logic of wages.
When governance worked: the Vienna case
Not every country followed the same trajectory.
The exception is Vienna, which today manages 42.6% of the city’s entire housing stock as public or subsidised housing: around 220,000 municipal dwellings and 185,000 non-profit cooperative dwellings. Its dedicated annual budget exceeds 400 million euros, more than Rome, Madrid and Lisbon spend combined for the same purpose.
The choice that made all this possible is a non-action.
In the 1980s and 1990s, while governments across Europe were privatising their public housing stock to raise cash, Vienna sold nothing. It retained municipal ownership, kept building, and upheld the principle that housing was a public service before it was a market.
The European comparison shows the scale of that decision. In the Netherlands, social housing accounts for 34% of the total housing stock. One home in three. In France, 14%. Italy stops at 4%, among the lowest figures on the continent.
The countries that chose to treat housing as social infrastructure have more stable property markets, lower costs and less generational inequality.
The Viennese model cannot be exported in its exact form within a year. Its roots go back to the Wien Rossa of the 1920s. What can be exported is the principle: whoever governs a system decides explicitly which logic prevails.
Vienna decided that returns were not the only variable that mattered.
The mortgage as a purchase of debt
For those who manage to get into the buying market, the mortgage mechanism is a trap.
In Milan, prices in the historic centre rose by 10.3% year on year in 2025, an overall increase of 22% since 2019. A flat in a central area costs between 350,000 and 400,000 euros. A fixed-rate mortgage on that sum, at current rates of between 3% and 3.4% over 25 years, means a monthly repayment of around 1,700-1,800 euros. To qualify, you need roughly 5,000-6,000 euros a month in stable, verifiable net income.
Anyone buying on those terms is not buying a home in the full sense of the word. They are buying a twenty-year debt (if they are lucky) whose real value depends on variables that no banking model can reliably predict: interest-rate trends, the resilience of the property market, the stability of the borrower’s income. The risk is transferred entirely to the person who signs, not to the one who lends.
In a property market that grows because it follows the logic of financial returns, the small buyer enters last, pays the highest price and takes on the greatest risk. If the market keeps rising, it is a good deal. If it corrects, the property is worth less than the outstanding debt. The dynamic is that of a system in which capital accumulates returns and labour accumulates debt.
The Italian situation
In Italy the problem has features that compound the European trend.
The proliferation of short-term tourist lets has removed housing stock from residents in the centres of the main cities in a quantifiable way: in Florence, Rome and Venice, neighbourhoods that until ten years ago had a stable resident population are now inhabited mainly by rotating tourists. Average wages for the under-30s are structurally below the national average, and the standard fair-rent tenancy agreement has all but disappeared in the large cities.
Italy entered the financialisation phase of the property market later than Britain and the Netherlands, but closed the gap rapidly in the 2000s without building the social protections other countries already had. The result is a system that imported the logic of returns without importing the balancing mechanisms. The 4% share of public housing is no accident: it is the consequence of decades of policies that never placed the right to housing on the same level as the right to property.
The solution is governance
The European Commission presented an Affordable Housing Plan in December 2025. The European Parliament put forward proposals in March 2026. These are signs that the problem has been recognised at institutional level. But the fiscal policies that produced the financialisation of the property market have deep roots and entrenched interests.
Young people’s housing problem is presented as a generational issue. As if it were the result of individual choices, misplaced expectations, wages that fail to keep pace.
The real mechanism is simpler and more uncomfortable: an essential good has been turned into an investment vehicle. When an essential good becomes an investment vehicle, its price follows the logic of expected returns, not the logic of need. Those who invest win when the price rises. Those in need pay for that rise.
The system works exactly as it was designed to.
Recognising this is the necessary premise for imagining solutions that are not cosmetic: that is, policies that treat housing as social infrastructure, instead of leaving it to follow the logic of the capital markets.
The property market is one of the best-documented examples of what happens when a system’s governance answers to a single metric: return on capital. Whoever governs decides which logic prevails. And the logic of common sense, and of affordability, has not applied to housing for almost forty years now.
New Connections (FAQ)
Does buying a home still make sense in 2026?
It depends on the city and the type of purchase. In a market such as Milan or Rome, mortgage eligibility criteria already exclude most under-35s. Where prices are more moderate, buying can still make long-term economic sense, provided you have a stable income, solid career prospects and the capacity to absorb rate changes. The most underestimated variable is liquidity risk: a property bought with a 70-80% mortgage in a market undergoing a correction is worth less than the outstanding debt. This risk does not appear in bank simulations.
Can the Vienna case be replicated in Italy?
In its exact form, no: it requires a century of continuous public investment and a different political culture. In its principles, yes: increasing the stock of public housing, introducing funds for first-time buyers, regulating short-term lets in areas of high housing pressure, taxing second properties differently from first homes. None of these measures is technically impossible. The question is whether there is the political will to face the opposition of those who draw rent from the current system.
Are short-term tourist lets really making the housing crisis worse?
Yes, in cities with high tourist demand. The mechanism is simple: a flat on a short-term let can earn in a weekend what a monthly rent brings in. The rational owner moves the property onto the tourist market, removing it from the residential market. The result is a reduction in available stock that pushes up residential rents. Data from Florence, Venice and the historic centres of Rome and Milan confirm the mechanism. Regulating short-term lets in areas of high housing pressure is one of the fastest-acting measures available.