In a leafy neighborhood in Dusseldorf, Milena and Manuel David planned to break ground this summer on a new home, a milestone that was going to get them out of a cramped apartment where they share a bedroom with their two kids.

But during the 16-month wait for a permit, mortgage rates had tripled and their building costs rose by €85,000 ($90,000). The couple crunched the numbers again before facing the fact that their dream of building their own home had collapsed as part of Europe’s worst construction crisis in decades.

Similar struggles are playing out across much of the continent. Residential building has tumbled as costs soar, while sluggish bureaucracies and increasingly stringent energy-efficiency regulations add to the headwinds. With housing already tight, the situation threatens to weigh on growth and further stoke political tensions as shortages squeeze more and more voters.