Rising Housing Costs in Europe: A Growing Burden on Disposable Income

Housing expenses, including utility bills, have emerged as the largest financial burden for Europeans, with their share of household expenditures rising steadily over the past two decades. In many countries, housing costs account for a significant portion of disposable income, impacting households' financial well-being across the European Union (EU).

How Much Do Europeans Spend on Housing?

On average, European households allocate nearly a fifth of their disposable income to housing-related expenses. However, this percentage varies significantly across member states, with some countries facing a far greater financial strain than others. In 2023, the EU average stood at 19.7%, with housing costs ranging from 11.6% in Cyprus to 35.2% in Greece.

What Do Housing Costs Include?

According to Eurostat, housing costs encompass all monthly expenses associated with a household's accommodation. These costs include utility bills for water, electricity, gas, and heating, structural insurance, maintenance fees, and property-related taxes. For homeowners, mortgage interest payments are included, while for tenants, rental payments form a significant portion of these expenses.

Disposable income, as defined in the report, includes earnings from employment and self-employment, investment income, property-related earnings, household transfers, and social transfers such as pensions.

Why Is Greece an Outlier in Housing Costs?

Greece stands out with the highest housing cost burden in the EU, where 35.2% of disposable income is spent on housing.The economic downturn from 2009 to 2014 played a major role in this trend, as Greek households saw their incomes shrink by nearly 40%. In recent years, inflation has further reduced disposable income, exacerbating the housing affordability crisis.

Additionally, Greece has witnessed rising property prices due to external demand. Foreign investment, driven by the golden visa program and the growth of short-term rental platforms, has pushed housing costs even higher. Meanwhile, thenew housing supply has remained limited due to a slowdown in construction during the economic crisis, intensifying affordability issues.

Comparing Housing Costs Across Major EU Economies

Among Europe's largest economies, Germany has the highest housing cost burden, with 25.2% of disposable income allocated to housing. France follows at 17.9%, while Spain (17.2%) and Italy (14.5%) report relatively lower figures.

In the Nordic region, Denmark (25.9%), Norway (25%), and Sweden (23.9%) rank among the top six in housing cost burdens. Meanwhile, Finland falls just below the EU average at 19.3%.

At the lower end of the scale, Cyprus (11.6%) and Malta (12%) report the least financial strain from housing expenses, followed by Slovenia (13.8%), Portugal (14%), and Croatia (14.4%).

Housing Costs and Poverty: A Pressing Concern

Lower-income households bear a disproportionately high housing cost burden. For those earning below 60% of the national median income—considered at risk of poverty—housing expenses account for 38.2% of their disposable income on average across the EU.

Greece once again leads in this category, where at-risk households allocate an overwhelming 62.4% of their income to housing. In Denmark, Norway, Sweden, Czechia, Germany, the Netherlands, and Switzerland, vulnerable populations spend over 45% of their income on housing.

In contrast, households with disposable incomes above 60% of the national median allocate just 16.2% of their earnings to housing costs on average.

The Rising Trend in Housing Costs

Housing costs across Europe have been upward since 2020, with a gradual yet persistent increase. Between 2020 and 2023, the EU-wide housing cost burden grew by 1.2 percentage points (pp). In 17 countries, this increase was 1 pp or more, highlighting a concerning trend.

Some countries experienced sharper increases, with Hungary (5.7 pp), Norway (5 pp), Estonia (4 pp), Luxembourg (3.8 pp), Germany (3.7 pp), and both Turkey and Malta (3 pp) witnessing the largest spikes. Conversely, Bulgaria saw a decline of 2 pp in housing costs over the same period.

Assessing Housing Affordability: A Need for Better Metrics

Experts argue that current methods of measuring housing affordability may not fully capture the extent of the problem. Dara Turnbull, a research coordinator at Housing Europe, suggests that housing costs as a percentage of disposable income fail to reflect the complete financial picture. Instead, more comprehensive indicators are needed to assess affordability and the broader economic impact of rising housing expenses.

Conclusion

The increasing share of disposable income spent on housing across Europe underscores a growing affordability crisis. Atthe same time, some countries have managed to keep housing costs relatively low, while others—particularly Greece and several Nordic nations—face mounting financial pressures. As housing expenses continue rising, policymakers and housing experts must find sustainable solutions to ensure affordable housing remains accessible to all income groups across Europe.

Disclaimer: This information is for general knowledge and informational purposes only and does not constitute financial, investment, or other professional advice.