Demand drivers for Living (urbanisation)

 Strong urbanisation is putting significant pressure on housing delivery across Europe’s major centres

Europe’s cities are predicted to grow by just under 100,000 people per month over the next decade – but none are adapting quickly enough to this significant influx of demand. This is putting pressure on the delivery of all types of homes across Europe’s major urban centres. From student housing near universities, rental products aimed at those across the age spectrum, to senior living homes for the continent’s fastest growing demographic, demand is not only growing, but changing as well.  

JLL’s new European City Dynamics research paper looks at the key demand-side drivers for Living across the continent and is part of a wider series of outputs by JLL Research to understand Europe’s changing Living markets.  

A consequence of this demand is strong urbanisation, with the proportion of urbanites expected to rise from 74.5% in 2019 to 76% by 2029 - the equivalent of 11.6 million people. This is caused by both strong city-level population growth alongside stagnant, and sometimes declining, rural populations.  

Cities are growing because of inward migration – from both the rest of the country and abroad – and natural increase (births outweighing deaths). Individuals moving to cities are generally young, often university graduates, and include those from abroad. Urban areas are projected to remain youthful in comparison to ageing countries – 33% will be under 30 in 2030. However, the fastest growing demographic in European cities is the 65+ cohort. There will be over 5 million more retirement-aged individuals in the continent’s major urban hubs in the next decade.  

Growing demand for different urban homes is not, however, being met by sufficient supply, which can generate a range of problems. Perhaps most importantly, house prices are increasing much faster than incomes, creating affordability issues. Private renting is, as a consequence, necessarily becoming more popular across Europe’s cities, but it is also becoming a tenure of choice. The most sought-after neighbourhoods – often central and well-connected – show the highest rents, while popular, cheaper neighbourhoods have seen fast rises in recent years.  

Demand for housing at different life stages is not evenly distributed across a city and its wider metropolitan area. The spatiality of demand varies between each city, but some broad trends can be observed. Students and young people largely want well-located and well-connected homes, both close to campuses and in areas with a vibrant social life. Families generally prefer to live where living and outdoor space is more affordable, where they could have access to open spaces and with good schools nearby. Retirees are more inclined to live in commuter zones and suburbs.  

Living is a unique real estate asset class, with a wide range of market participants, that includes legislators, planners, developers, investors and operators.  

For Europe’s cities of the future to be successful, we must recognise individual city-specific characteristics and work alongside each other to provide quality housing solutions for current and future generations of Europeans. 

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