LIVING COSTS IN EUROPE: HOW MUCH OF YOUR DISPOSABLE INCOME GOES TO HOUSING AND BILLS?

Housing, including utility bills, is the largest expense for Europeans and its share of household expenditure has risen significantly over the past two decades. Housing costs also represent a significant portion of disposable income.

In the EU, on average, a fifth of disposable income is spent on housing costs. So, how much of your disposable income goes to housing and bills? Are you curious about the average in your country and how it compares to other European countries?

What do housing costs include?

First of all, what exactly do "housing costs" include? According to Eurostat, the provider of this data, housing costs refer to the monthly expenses connected with a household's occupancy of their accommodation, and this includes the cost of utilities such as water, electricity, gas, and heating. 

For homeowners, housing costs include mortgage interest payments, while for tenants, they include rental payments. It also includes expenses such as structural insurance, mandatory services and charges, regular maintenance and repairs and taxes.

In 2023, on average in the EU, 19.7% of disposable income was dedicated to housing costs. This differed among member states, ranging from 11.6% in Cyprus to 35.2% in Greece. 

Disposable income included all income from work (employee wages and earnings from self-employment); private income from investment and property; transfers between households; all social transfers received in cash including old-age pensions.

Greece (35.2%) is a clear outlier, as the second-ranked country, Denmark, is significantly lower at 25.9%, closely followed by Germany at 25.2%.

Why is Greece an outlier in housing costs?

“The economic crisis of the past decade was a key factor that sets Greece apart from other European countries in terms of housing costs,” said Ilias Nikolaidis, content director at diaNEOsis, an Athens-based think tank.

He explained that Greek households lost around 40% of their income between 2009 and 2014, and the recent inflation wave has further eroded disposable income. Meanwhile, the crisis kept property prices low, attracting demand from abroad. This period also saw the rise of gig economy rental platforms, the introduction of a golden visa program, and a surge in tourism.

“Demand from abroad, in diverse forms, has been pushing prices upwards, while local household incomes did not grow as fast,” he noted.  Additionally, the crisis led to a drop in housing supply as construction slowed, with fewer new homes entering the market for years.

In the EFTA countries, Norway and Switzerland, housing costs as a share of disposable income were also high, at 25% and 25.2%, respectively.

Germany far exceeds other EU’s ‘Big Four’

Among the EU’s ‘Big Four’ economies, Germany had the highest housing costs at 25.2%, followed by France, where households spent 17.9% of their disposable income on housing. This ratio was even lower in Spain (17.2%) and Italy (14.5%).

Three Nordic countries—Denmark, Norway, and Sweden—ranked among the top six in this indicator, each exceeding 23.9%. Meanwhile, Finland was positioned just below the EU average, at 19.3%.

In addition to Cyprus, housing costs were below 15% in five other countries: Malta (12%), Slovenia (13.8%), Portugal (14%), Croatia (14.4%), and Italy (14.5%).

According to OECD’s “Housing costs over income” report, various factors contribute to higher or lower housing cost burdens.  “For instance, access to mortgages, mortgage conditions, loan-to-value and loan-to income ratios may help to explain variation across countries and income quintiles,” the report said. 

People at risk of poverty spent two-fifths of their income on housing

Unsurprisingly, lower-income households allocate a larger portion of their disposable income to housing costs. For households with a disposable income below 60% of the national median—considered at the risk of poverty—the share of housing costs in disposable income averaged 38.2% across the EU.

In this indicator, the ratio ranged from 19.2% in Cyprus to 62.4% in Greece. This means that in Greece, people at risk of poverty must spend nearly two-thirds of their disposable income on housing. In Greece, 2.7 million or 26.4% of the population, were at risk of poverty or social exclusion.

People at risk of poverty also spent more than 45% of their disposable income on housing in Denmark (57%), Norway (48.5%), Sweden (48.1%), Czechia (46.1%), Germany (45.8%), the Netherlands (45.7%), and Switzerland (45.5%). 

In contrast, for those with a disposable income above 60% of the median income, the share of housing costs amounted to 16.2% on average in the EU.

The share of housing costs is increasing in most countries

Eurostat’s data covers the period since 2020, enabling a comparison over the last three years. At the EU level, housing costs have gradually increased each year, though slightly. Between 2020 and 2023, the overall change was 1.2 percentage points (pp).

Among 30 countries, housing costs rose by 1 pp or more in 17 countries, showing an upward trend. In contrast, costs decreased by more than 1 pp in only three countries.

The increase in housing costs was 3 (pp) or more in seven countries: 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).

In contrast, Bulgaria reported the largest drop, with a decrease of 2 pp.

There are several indicators on housing costs and housing affordability. Dara Turnbull, a research coordinator at Housing Europe,  explained that the current measures of housing affordability are in fact not fit for purpose and do not allow us to understand the gravity of the situation. He argues that housing costs as a percentage of disposable income are quite flawed. 

2025-02-03T06:33:20Z