The OECD’s “Regions and Cities at a Glance 2024” report sheds light on the significant regional disparities in housing costs across Europe, measured as a percentage of disposable income. This metric provides a valuable insight into the financial burden housing places on households in different areas within the same country. Across OECD regions, households dedicate nearly one-fifth of their disposable income to housing, encompassing rent, mortgages, utilities, and maintenance. In 2022, the difference in housing expenditure between the most and least expensive regions within a country averaged 10 percentage points, but this gap widened considerably in some European nations.
The UK exemplifies this disparity, exhibiting a 16 percentage point gap between its most and least expensive regions. Greater London, with housing costs consuming 24.4% of disposable income (51% above the national average), stands in stark contrast to the North and Scotland, where the proportions are a mere 8.7% and 11.3%, respectively. This 181% difference highlights the extreme pressure faced by London residents. Interestingly, despite this wide gap, the UK also boasts some of the most affordable regions among the countries surveyed, illustrating that large disparities don’t necessarily equate to universally high housing costs.
Italy presents another case study in housing cost variation. There, the national average is 25% of disposable income dedicated to housing, but this ranges from 31.2% in the Campania region around Naples to 17.1% in Marche, a difference of 14.1 percentage points or 82%. While significant, this disparity is less extreme than London’s outlier status within the UK. Spain also exhibits regional variations, with the Balearic Islands at 30.4% contrasting with Galicia at 20.3%, a 10.1 percentage point gap. Austria shows a smaller, yet still substantial, 7.8 percentage point difference between Vienna (29.9%) and Upper Austria (22.1%).
The report highlights Lake Geneva in Switzerland as the most expensive region among the 11 European countries analyzed, with housing consuming a staggering 36.3% of disposable income. Ticino, another Swiss region, follows closely behind at 34.9%, solidifying Switzerland’s position as the most expensive country overall. Bratislava in Slovakia comes in third at 33.2%, but the disparity within Slovakia is much smaller, only 3.8 percentage points. Other countries like Ireland, Estonia, and Sweden show smaller gaps between their most and least expensive regions, all below 5 percentage points, but with varying overall housing cost burdens.
The data reveals a correlation between higher housing costs and lower homeownership rates in most of the countries studied. Vienna, for example, has an extremely low homeownership rate of 19%, compared to 74% in Burgenland, reflecting the high housing costs in the capital. Similarly, Lake Geneva and Greater London, both high-cost regions, exhibit lower homeownership rates of 31% and 54%, respectively. Lithuania is the sole exception to this trend. The OECD report emphasizes that housing costs typically weigh more heavily on residents in urban areas, leading to disproportionate impacts from rising housing prices. This underscores the importance of understanding regional variations within national housing markets to address affordability challenges and promote equitable access to housing.
The insights provided by the OECD report underscore the complexity of housing affordability across Europe. While national averages offer a general overview, focusing on regional variations reveals a more nuanced picture. The significant disparities within countries highlight the need for targeted policies that address the specific challenges faced by different regions. Furthermore, the link between high housing costs and lower homeownership rates raises questions about access to housing and the potential for wealth accumulation through property ownership. The data serves as a call to action for policymakers to consider these regional dynamics when developing strategies to promote affordable and accessible housing for all.
