Regional disparities in housing costs as a share of disposable income differ significantly across European countries. With the UK showing the largest gaps and Switzerland topping overall costs, this issue highlights the ongoing challenges of urban living and affordability across the continent.
Housing Costs and the Urban Living Crisis
Europe’s housing and living crisis has intensified in recent years, driven by record inflation in 2022, the highest in four decades across the EU. Housing costs, as a percentage of disposable income, are particularly stark in urban areas. This is where regional disparities in housing costs within countries are most pronounced.
The OECD’s “Regions and Cities at a Glance 2024” report offers valuable insights. It reveals that housing expenditures, including rent, mortgages, utilities, and maintenance, consume nearly one-fifth of disposable income on average. In 2022, the average gap between the highest and lowest regional housing costs within countries was ten percentage points (pp), with the UK leading at 16 pp.
The UK: A Tale of High Disparities & Affordable Regions
In the UK, households spent an average of 16.1% of disposable income on housing in 2022. Greater London saw a staggering 24.4%, 51% above the national average, while the North recorded just 8.7%. Scotland followed at 11.3%. The gap between the highest and lowest regions reached 15.7 pp, a disparity of 181%. Despite this, the UK hosts seven of the least expensive regions among the 11 European countries studied.
Italy: Campania Tops Housing Costs
Italy presented another stark example of regional disparities in housing costs. Nationally, housing expenses averaged 25% of disposable income in 2022. Campania, centered around Naples, recorded the highest at 31.2%, while Marche had the lowest at 17.1%. The resulting gap of 14.1 pp highlights the uneven financial burden across regions.
Country Highlights: Housing Costs Across Europe
Spain: Balearic Islands Lead the Way
Spanish households spent an average of 26.3% of disposable income on housing in 2022. The Balearic Islands, led by Mallorca, topped the list at 30.4%, while Galicia recorded the lowest at 20.3%. This marked a gap of 10.1 pp, with costs in the Balearic Islands 50% higher than in Galicia.
Switzerland: Lake Geneva Dominates
Switzerland stood out as the most expensive country, with Lake Geneva consuming 36.3% of disposable income. Ticino followed at 34.9%, showcasing the highest overall costs among the 11 countries.
Slovakia: Bratislava Among the Most Expensive
Bratislava, with housing costs at 33.2% of disposable income, ranked as the third most expensive region. Slovakia’s regional gap, however, was smaller at just 3.8 pp, mirroring trends in Ireland (4.8 pp), Estonia (4.4 pp), and Sweden (3 pp).
Urban Areas, Homeownership, and Housing Costs
Urban areas consistently face higher housing costs, influencing broader trends in consumption and homeownership. The OECD report highlights how homeownership rates are inversely related to high housing costs in many regions. For example, Vienna’s homeownership rate is just 19%, compared to Burgenland’s 74%. Similarly, Lake Geneva’s rate is 31%, while Greater London’s is 54%. Interestingly, Lithuania is an exception, with no strong correlation between housing costs and homeownership.
This data underscores the disproportionate impact of rising housing costs on urban residents and provides critical insights into regional disparities in housing costs across Europe.
