Housing costs as a share of disposable income vary significantly across Europe. The UK shows the widest gap, with regions among both the highest and lowest cost proportions.
Regional Disparities in Housing Costs
Housing and living crises have strained Europe in recent years. Inflation in 2022 reached its highest levels in over four decades in the EU. Capitals and larger cities faced greater housing cost disparities compared to smaller urban areas.
The OECD’s Regions and Cities at a Glance 2024 report highlights these differences. Housing costs include rents (actual and imputed), mortgages, utilities, household equipment, and maintenance. On average, households in OECD regions spend nearly 20% of disposable income on housing. In 2022, the gap between the most and least expensive regions within countries averaged ten percentage points (pp). The UK (16 pp) and Italy (14 pp) experienced the largest gaps.
London: High Costs and Wide Gaps
In the UK, households spent 16.1% of disposable income on housing on average. In Greater London, this figure jumped to 24.4%, 51% higher than the national average. The North had the lowest proportion at 8.7%, followed by Scotland at 11.3%. The gap between the highest and lowest regions was 15.7 pp, a disparity of 181%.
Greater London stood out, with the South East at 17.9% being the second-highest region, still 6.4 pp lower. Despite the UK’s wide disparities, it also hosts seven of the least expensive regions among 11 countries surveyed. This highlights that wide disparities don’t always mean the highest absolute costs.
Italy: Naples to Marche
In Italy, housing costs averaged 25% of disposable income. Campania, centered on Naples, recorded the highest share at 31.2%. Marche had the lowest at 17.1%, a gap of 14.1 pp or 82%. The Bolzano-Bozen and Trento provinces followed closely, while Abruzzo ranked next at 29.1%.
Spain: Balearic Islands Lead
In Spain, households spent 26.3% of disposable income on housing. The Balearic Islands had the highest share at 30.4%, while Galicia recorded the lowest at 20.3%. The gap was 10.1 pp, with housing costs in the Balearics 50% higher than in Galicia. Other high-cost regions included Murcia (30.2%) and Madrid (30%).
Housing Costs Across Europe
Austria showed a 7.8 pp gap, with Vienna at 29.9% and Upper Austria at 22.1%. In Lithuania, the disparity was 7.6 pp between Klaipeda (21%) and Alytus (13.4%), while Kaunas recorded 15.5%.
Switzerland: Lake Geneva Tops the List
Lake Geneva had the highest housing costs, with households spending 36.3% of disposable income. Ticino followed at 34.9%, making Switzerland the most expensive country overall. Slovakia’s Bratislava came third at 33.2%, with a 3.8 pp gap within the country.
Ireland, Estonia, and Sweden showed smaller regional disparities, with gaps under 5 pp. However, the share of income spent on housing varied significantly, from 17% in Estonia to nearly 30% in Sweden.
Urban vs. Non-Urban Costs and Homeownership
Urban areas consistently report higher housing costs than non-urban regions. The OECD report notes that price changes affect urban areas differently, with smaller relative price decreases.
Homeownership rates are lower in high-cost regions. For example, Vienna’s homeownership rate is just 19%, compared to 74% in Burgenland. Similarly, Lake Geneva’s rate is 31%, while Greater London’s is 54%. Lithuania is the only exception, with homeownership rates less tied to regional cost disparities.
