Burdened by Housing Costs: Germans Spend a Quarters' Wage on Housing, Europe Comparison Reveals
Living Expenses Consume a Fourth of Every German Euro Spent
Let's dive into the steep housing costs faced by Germans and compare it with other European nations.
On the wallet's frontline, housing takes a toll, with Germans parting ways with an average of 24.5% of their income on housing costs, according to Eurostat's latest figures. This percentage is a substantial 5.3 points higher than the European Union average. Though there's been a slight improvement since 2023, Germany continues to lead the continent in high housing costs.
In contrast, countries like France, Austria, and the Netherlands sport significantly lower percentages. People at risk of poverty in Germany spent a staggering 43.8% of their income on housing, almost every second euro!
Denmark and Greece: Expensive Homes and Abroad
Surprisingly, Denmark and Greece lead the pack of priciest European housing markets, with Denmark reporting an average share of 26.3% in 2024 and Greece standing at a whopping 35.5%. Sweden's figures are comparable to Germany. Meanwhile, Cyprus, Malta, Italy, and Slovenia boast much lower housing cost shares of 11.4%, 12.5%, 13.6%, and 13.6%, respectively. The EU average stands at 19.2%.
Insight: Housing in Germany is a burden for many, according to BSW chairwoman Sahra Wagenknecht. "Spending significantly less on housing in countries like France or Austria highlights that a change in approach is possible," she said. Wagenknecht advocates for a nationwide rent cap and a more significant share of non-profit housing in the market to provide relief.
A Hierarchy of Home Prices
It’s essential to acknowledge the underlying factors contributing to Germany's high housing costs. These factors include demand-supply imbalances, regulatory environments, economic factors, and urbanization, all of which play a critical role in shaping the housing market.
In major German cities like Berlin, Munich, and Hamburg, high housing costs and rental price increases are commonplace due to insufficient supply meeting elevated demand. The outlook, however, varies across regions, with cities like Hamburg and Düsseldorf witnessing a decline in city center property prices whilst experiencing a moderate decrease in suburban areas.
Germany isn't the only European country grappling with high housing costs; France and Paris specifically face price hikes similar to Germany's, albeit with significant regional variations. In comparison, Austria has experienced a slight housing price drop, while specific data on Denmark's housing market development, relative to Germany, is currently unavailable.
Housing costs can put a strain on the wallet, and in Germany, it's a challenge many face daily. Understanding the regional and urban disparities between Germany and other European nations is crucial in navigating the ever-evolving housing market landscape.
- To alleviate the housing burden in Germany, BSW chairwoman Sahra Wagenknecht suggests implementing a nationwide rent cap and increasing the share of non-profit housing in the market.
- In contrast to its high housing cost share, cities like Hamburg and Düsseldorf in Germany have seen a decline in city center property prices, while Berlin, Munich, and other major cities continue to struggle with high housing costs and rental price increases due to insufficient supply.
- Sweden's housing cost figures are comparable to Germany, while countries like Cyprus, Malta, Italy, and Slovenia have much lower housing cost shares compared to the EU average, with Denmark and Greece leading the pack of priciest European housing markets.
- A community policy focusing on vocational training could potentially provide individuals with the skills necessary to secure better-paying jobs in the personal-finance and finance sectors, helping them afford higher housing costs and reduce their financial burdens.