On 16 December 2025 the European Commission published the first-ever European Affordable Housing Plan. Buried in the industrial pillar that came with it is a sentence our sector has waited years for: off-site and modular construction is not a niche experiment. It is the EU's stated fastest route to housing supply.
For most of the last decade, off-site construction in Europe has been argued for from the inside, by manufacturers, by a handful of progressive housing associations, by the trade press. The case was good and the projects were real, but the policy framing was missing. Modular was something you had to justify.
That changed in December.
The 16 December package is four documents, not one, and the distinction matters if you want to know where the leverage sits:
- The European Affordable Housing Plan. COM(2025) 1025, the first of its kind at EU level. This is the political frame and the action table.
- The European Strategy for Housing Construction. This is the industrial pillar. This is where construction methods, standards and productivity live, and it is the document that names off-site directly.
- A revision of State aid rules on Services of General Economic Interest, which changes how Member States can fund affordable housing.
- A New European Bauhaus communication and a proposal for a Council recommendation.
If you only read one, read the Strategy. It is the one that talks about how buildings get built.
The Plan's own diagnosis is blunt. Across 2013–2024, EU house prices rose around 60% in nominal terms and average rents around 20%, with prices growing faster than household income. Supply moved the other way: residential building permits are down roughly 22% since 2021.
The Strategy adds the number that should concern anyone in the industry rather than only the housing market. Construction labour productivity per hour has fallen about 8% since 2019, the largest productivity decline of any industrial sector over that period. Not the slowest growth. The largest decline.
You cannot fix a supply crisis with a shrinking-productivity delivery model. That is the logic that put our sector in the document.
From the European Strategy for Housing Construction, page 10, off-site and modular solutions "offer the clearest potential for ramping up housing supply rapidly."
Note the framing the Strategy chooses. It ties off-site specifically to social and affordable housing, because speed, quality and cost-efficiency matter most acutely there, and it notes that modular components can often be disassembled and reused, which brings circularity into the argument rather than treating it as a separate agenda.
Context for that last point: construction is responsible for over 35% of the EU's waste generation and 5–12% of total national greenhouse gas emissions. A method that shortens programmes and takes buildings apart at end of life is doing two jobs.
The Commission's off-site construction project page puts the operational case at:
- 20–60% shorter construction times
- 10–15% reduction in construction waste
- +4.5% annual growth potential for off-site in residential buildings
- €68.8bn overall value of the EU off-site market by 2040
One note on that last figure, because we would rather flag it than quietly pick the bigger number. The same Commission page separately cites growth potential of "up to €1 trillion by 2040, i.e. a 600% increase in revenues." The two figures are not reconciled on the page. We publish the conservative €68.8bn EU-market figure and would encourage anyone quoting the trillion to say where it comes from.
The Commission names the bottlenecks itself, and the list will read as familiar to anyone who has tried to scale a factory: regulatory fragmentation across the EU, high upfront investment cost, a shortage of skilled workers, low digital penetration, and the lack of stable demand.
The last one is the quiet killer. A factory needs a pipeline, not a pilot. Which is why the demand-side measures in the package matter as much as the standards work: the upcoming revision of the Public Procurement Directive is expected to help create stable demand for low-carbon construction products and innovative methods such as novel modular building solutions, often produced by SMEs.
Two more data points on fragmentation worth carrying into any conversation about cross-border work. A case study in Prague estimated that a lengthy residential permitting process adds approximately 16.5% to residential construction costs. And while 11% of EU mobile workers and 34% of the mobile self-employed work in construction, only 1% of construction services are provided cross-border within the EU. A single market on paper; twenty-seven markets in practice.
This is the part to act on. The package comes with a timetable, and several items land inside the next four quarters.
- Q4 2025. Revised State aid rules (SGEI). Member States can back affordable-housing projects without prior notification to the Commission where SGEI conditions are met.
- Q1 2026. Standardisation request for a Digital Building Logbook standard, with a harmonised DBL standard targeted by end 2028.
- Early 2026. Standards for off-site construction products and modular systems. The Commission launches the request for development as a priority under the CPR Acquis process. This is the single most consequential item on the list for manufacturers.
- 2026. Commission guidance on modular and off-site construction, including best practice and proof-of-concept demonstrations on safety, accessibility, sustainability, rapid deconstruction and affordability.
- 2026. A pilot project on off-site and modular construction under the Competitiveness Coordination Tool, built around cross-border multi-country projects and aligning Member State regulatory frameworks.
- 2026. The first-ever EU Housing Summit, organised with the European Council.
- Q3 2026. European Housing Alliance and a Pan-European Investment Platform for affordable and sustainable housing, with a digital portal, an expert group and national hubs.
- Q4 2026. Construction Services Act, on cross-border provision of construction services without lowering labour and social standards.
- Q4 2026. Advanced Materials Act, covering R&I support, expanded EU production capacity and streamlined regulatory processes.
- 2027. Target date to adopt the first standardisation request for off-site products and modular systems.
- 2027. Housing simplification package, covering planning, zoning, permitting rules and building codes.
- By 2030. Large Scale Skills Partnership, aiming to train 3 million workers and boost digital, AI-related and modular construction skills.
Financing is not a 2028 conversation. The Plan points to roughly €43bn in housing-related investment already being mobilised under the current MFF, across Cohesion Policy, InvestEU, LIFE, the Single Market Programme, Horizon Europe and NextGenerationEU. An estimated €10bn in additional investment is expected in 2026–2027 through InvestEU. Around €1.5bn in Member State and regional proposals to reprogramme Cohesion funds under the mid-term review had already been received, on top of the €10.4bn already planned for energy efficiency and social housing, and the mid-term review lets regions add affordable housing to that.
Three things follow, and none of them require waiting for 2028.
Standards are being written now, not later. The request for off-site product and modular system standards starts in early 2026 with a 2027 adoption target. Whoever is in the room while those are drafted will find their systems easier to certify than whoever reads them afterwards. If you are a manufacturer, standards participation has moved from a nice-to-have to a commercial position.
Public demand is about to become bankable. Between the State aid revision, the procurement directive revision and the investment platform, the pipeline problem the Commission itself named is the problem it is trying to solve. Factory investment cases that failed on demand certainty two years ago deserve a re-run.
Cross-border is the actual prize. The 1% cross-border services figure is the gap. The CCT pilot is explicitly about multi-country projects and aligning national regulatory frameworks, which is the only way a factory in one Member State serves demand in three.
The policy argument for off-site construction in Europe is now settled on paper. What is not settled is who is industrially ready when the standards, the funding and the demand arrive at the same time. On the current timetable, that is 2027, not the 2030s.
