Decarbonisation or affordability? For housing, it must be both

Across Europe, housing unaffordability affects almost 15 million people and nearly one million are facing homelessness, according to the Institute for Human Rights and Business (IHRB). These figures are stark, but they only begin to tell the story.

Access to adequate housing is slipping further out of reach for low-income and-middle-income households. Yet at the same time, there’s a clear mismatch between supply and need as one-third of the EU population lived in under-occupied homes in 2023.

This isn’t just a housing issue, it’s an economic and social issue too. Cities that cannot offer affordable, adequate homes for a broad range of residents will struggle to sustain social cohesion, innovation or economic competitiveness.

Meanwhile, another crisis looms: climate change. Buildings in Europe consume over 40% of all energy and are responsible for around a third of greenhouse gas emissions, according to the European Commission. Yet more than three quarters are energy-inefficient, and more than 85% are expected to still be in use by 2050.

Decarbonising this ageing building stock, especially homes, is essential but far from straightforward. Many are difficult and costly to retrofit, and for affordable housing providers operating on tight margins, deep renovations often remain out of reach. Still, they are crucial, not just to cutting emissions, but for lowering energy bills and improving living conditions for millions across Europe.

So here lies the paradox. The housing and climate crises are deeply intertwined, and often at odds with one and other. Addressing affordability typically means building more homes, yet construction itself is carbon intensive. At the same time, efforts to decarbonise often favour retrofits on high-value assets or more sustainable developments in prime locations, sidelining the affordable housing sector and exacerbating inequalities.

This tension is compounded by the scale of unmet housing need. Europe faces a housing shortfall of nearly 9.6 million homes, according to CBRE’s European Real Estate Market Outlook, while the UK government is targeting 300,000 new homes each year to meet demand. Without embedding low carbon standards such as installing heat pumps, fitting solar panels, and maximising energy efficiency through design and insulation, building at this scale risks locking in emissions for decades.

Governments seem to be recognising the scale of the challenge, introducing initiatives like the EU’s Affordable Housing Plan (expected in 2026) and Renovation Wave which aims to double building renovation rates by 2030. The UK also recently announced a £39bn commitment for new social and affordable housing.

But while these policy ambitions are vital, they must be accompanied by coordinated action across the entire housing industry.

That’s where ULI Europe’s new initiative, C Change for Housing, comes in. Recognising that the housing and climate crises cannot be solved in silos, this pan-European programme aims to mobilise the private sector to work alongside the public sector to drive meaningful, joined-up action.

At its core, the initiative brings together practitioners and leaders from across the housing sector – developers, investors, policymakers, housing providers, NGOs and more – to identify the systemic barriers preventing progress on scalable, inclusive, and sustainable housing. It will develop practical tools, guidance, and solutions to overcome those barriers, with a focus on what can work in the real world, not just in theory.

Because housing challenges are deeply local, community engagement will play a critical role. Proposed solutions will be tested and refined through local input to ensure they support a just, inclusive, and scalable transition.

The programme’s first phase is currently underway, focussing on mapping existing efforts, identifying gaps, and ensuring momentum is directed toward solutions that avoid duplication and deliver impact.

ULI is calling for experts and practitioners across Europe working in residential development, investment, research, policy, and decarbonisation to get involved through interviews, workshops and by following the programme’s progress. Collective insight and collaboration will be key to unlocking the practical, scalable solutions needed to address two of the defining challenges of our time.