July 25, 2024

Housing Finance Development

It's Your Housing Finance Development

How Europe’s housing scarcity varies across countries | articles

Local housing markets across Europe are fundamentally different and difficult to compare. Variations in fiscal policies and the supply of social housing are just some of the many differences. But in this article, we aim to analyse the severity of the housing scarcity across the 10 biggest EU countries.

We use six indicators to compare the housing situation. The first three provide insight into the current housing situation of households: the age at which young adults leave their parental home, living space per person and the relative cost of housing. The next three indicators provide insight into the (future) housing challenge of countries, and how easy it is to achieve this. We look at expected population developments, population density and the historic rate of new-build houses.

Germany, Italy and the Netherlands show higher levels of housing scarcity
Germany, Italy and the Netherlands show higher levels of housing scarcity in many of the criteria we used. For instance, in Italy, young people have enormous difficulty finding their own place to live and Italians have fewer rooms at their disposal in general. However, the affordability of total housing costs in Italy is one of the best relatively speaking. In contrast, in the Netherlands and Germany, the affordability of living is problematic and the population density is high, which makes further expansion of the housing stock more challenging. That said, in the Netherlands and Germany, people are relatively young when they leave their parental house. This means that despite all the housing market issues, one way or another, many of them are still able to find a place of their own.

Sweden and Ireland have lower levels of scarcity
At the other end of the spectrum, we often find Sweden and Ireland. Housing scarcity also exists in these countries but to a lesser extent based on the criteria we used. In Ireland, housing costs are relatively low, the Irish have relatively more rooms at their disposal and population density is relatively low. Yet over the coming decades, Ireland’s population growth is expected to be the highest in Europe, which could put extra pressure on the market. Swedes are the youngest when they leave their parental house. This means that, although it is probably not always easy, they are able to find their own place to live. Low population density and a high rate of new-build houses suggest the Swedish housing market could adapt relatively easily to further population growth. Yet, the Swedish housing market also has its issues, as affordability is one of the worst.