European Affordable Housing Plan: an opportunity for affordable construction and building performance
Across Europe, rising house prices and rents have created a sense of injustice about access to decent housing. Over the past decade, EU house prices have risen by more than 60% and rents by more than 20%, making it hard for many families to find a home they can afford. The European Commission’s Affordable Housing Plan, announced in Strasbourg on 16 December 2025, recognises that the housing crisis is undermining social cohesion and the competitiveness of the EU economy.
The Four Pillars of the Affordable Housing Plan
To address these challenges, the Plan focuses on four pillars:
- Boosting housing supply – EU initiatives such as the European Strategy for Housing Construction will promote advanced construction materials and methods (including off-site and modular construction) and encourage digitalisation to improve resource efficiency. A housing simplification package will cut red tape by reducing administrative burdens, speeding up permitting and renovation processes and improving cost efficiency.
- Mobilising investment – The Commission is creating a Pan‑European Investment Platform with the European Investment Bank, national promotional banks and other financial institutions to crowd in public and private capital. Revised state‑aid rules will also enable faster and simpler public support for social and affordable housing projects, unlocking long-term investments.
- Enabling immediate support while driving reforms – A legislative initiative on short-term rentals will help ease housing stress by balancing tourism benefits with local
affordability. The Commission will also tackle speculation in the housing market and encourage Member States to reform spatial planning, social housing and taxation frameworks to increase supply. - Protecting the most affected – The Plan emphasises dedicated programmes for young people, students, essential workers and low-income households. It calls for investment in student and social housing and measures to prevent and address homelessness. A new European Housing Alliance will help implement the Plan and the Commission will report on progress before the end of its mandate.
Why the Plan matters for the EPS industry
Expanded polystyrene (EPS) is used in building-insulation applications, including affordable-housing projects. When correctly specified and installed, EPS insulation can contribute to a building’s thermal performance. Actual energy use, energy costs and greenhouse-gas impacts depend on the overall building design, installation, climate, operation and energy source. EUMEPS’ September 2025 position paper on the Affordable Housing Plan stresses that affordability should not be defined merely by upfront costs; long-term affordability must include energy efficiency, social inclusion and climate resilience.
The paper calls for:
- Deep renovation of existing buildings to improve performance and prolong lifespan. EPS insulation can be used in retrofit projects where it meets the technical requirements of the building system.
- Energy-efficient solutions that lower operating costs. EPS insulation provides thermal performance; operating costs and payback periods depend on the building design, installation, climate, energy source and use of the building.
- Support for social and cooperative housing and durable, recyclable materials. EPS can be mechanically and chemically recycled, subject to product design and the availability of collection and recycling infrastructure. Its durability and low maintenance contribute to a lower total cost of ownership, making it suitable for social housing projects.
The Affordable Housing Plan’s focus on productivity and innovation in construction aligns with the EPS industry’s commitment to advanced materials and technical innovation. Encouraging modular construction and digitalisation can lead to more consistent insulation performance and reduced waste. Cutting red tape in permitting and renovation could accelerate building-retrofit project using EPS insulation.
Investment signals and policy alignment
The Commission has already mobilised over €43 billion in housing investments under the current EU budget and plans to mobilise additional funds through InvestEU and cohesion policy. A dedicated investment platform will leverage the European Investment Bank and regional banks to channel capital towards affordable, sustainable housing projects. For the EPS value chain, this creates opportunities to scale up manufacturing of insulation products, expand recycling capacity and integrate EPS into modular building systems.
Revised state‑aid rules will simplify public support for social and affordable housing. This could encourage Member States to provide grants or tax incentives for energy-efficient materials, including EPS. The Plan’s commitment to driving structural reforms in planning, social housing and taxation, as well as addressing speculation and short-term rentals, aims to stabilise the housing market and create a predictable environment for long-term investments in insulation and renovation.
The Plan also includes a New European Bauhaus communication and Council recommendation. The NEB initiative supports sustainable, affordable and beautiful projects in the built environment, and its NEB Academy aims to up‑skill the construction workforce. These elements reinforce the link between housing quality, sustainability and innovation. EPS manufacturers can contribute by developing products suited to relevant project requirements and collaborating on NEB projects that combine affordability with design excellence.
Conclusion
The European Affordable Housing Plan marks a turning point in EU housing policy. By increasing supply, mobilising investment, reforming regulations and protecting vulnerable groups, the Plan provides a framework for Member States to deliver more affordable, sustainable homes. For the EPS industry, the Plan underscores the importance of energy efficiency, circularity and innovation.
Expanded polystyrene insulation can be used in renovation and new-build projects where its technical characteristics meet the project requirements. As EU institutions, national authorities and industry partners implement this Plan, EUMEPS will continue to advocate for deep renovation, building performance and supportive policies that align housing affordability with Europe’s green and social objectives.