Expensive Abodes: Germany vs. Europe, Every Fourth Euro Goes to Housing
Germans spend a fourth of their earnings on housing costs
When it comes to housing costs, Germans seem to be living the high life compared to their European counterparts.
On the average, a quarter of their income is spent on housing. Figures from Eurostat, evaluated by the Federal Statistical Office at the request of the BSW, paint this grim picture. When measured by income, housing is nearly unaffordable anywhere else in Europe, according to the BSW.
People in Germany are coughing up 24.5 percent of their income for rent and other housing expenses, according to data from last year. This figure is a whopping 5.3 percentage points more than the EU average. Although there's been a slight improvement compared to 2023, Germany still ranks high among European countries with expensive housing, BSW noted.
Country comparisons reveal some startling contrasts. In France, Austria, and the Netherlands, housing cost values are significantly lower. Those at risk of poverty in Germany spend an alarming 43.8 percent of their income on housing—nearly every second euro.
Denmark takes the crown for Europe's most expensive housing, with a 26.3 percent average share of housing costs. Greece comes in a close second with a staggering 35.5 percent. Sweden, however, is roughly in line with Germany. Countries like Cyprus, Malta, Italy, and Slovenia report lower housing cost shares (11.4%, 12.5%, 13.6%, and 13.6%, respectively). The EU average hovers around 19.2 percent.
BSW Chairwoman Sahra Wagenknecht labels housing in Germany as a "poverty program" for many. "People in countries like France or Austria spend significantly less on housing," she remarks, "showing that it can be done differently," she adds emphatically. Wagenknecht advocates for a nationwide rent cap, a bid to increase the share of affordable housing in the housing market.
The high cost of housing in Germany is a complex issue attributable to several factors: strong demand in major cities, persistent price increases, interest rate impacts, and regional variations. Measures being proposed as potential solutions include increasing housing supply, encouraging development in suburban areas, managing the speculative market, and addressing wage and inflation impacts. Only time will tell if these measures will yield significant results in easing housing affordability in Germany.
[References: ntv.de, hul/AFP]
Keywords: Housing costs, Europe, Germany, inflation, interest rates, housing affordability, major cities, construction, regulation
Topics: Real estate, economy, urban development, housing policy, market dynamics
In light of these findings, it would be prudent for policymakers to address the issue of skyrocketing housing costs in Germany, particularly in comparison to the rest of Europe. To improve housing affordability, personal-finance-focused strategies such as addressing inflation and interest rate impacts, as well as implementing a nationwide rent cap, should be considered. Additionally, vocational training programs could be initiated to attract and train construction workers, thereby increasing the housing supply and potentially reducing prices. A concerted effort in urban development, including encouraging development in suburban areas, managing the speculative market, and employing smart regulation, could also lead to a more affordable housing market.
