Housing Construction and Housing Affordability

As expected, the affordability of housing (measured by average rent to average disposable household income) is relatively stable in the surveyed cities, reflecting local norms for tolerable housing costs. However, Prague and Budapest have significantly higher ceilings for housing costs. 

Chart: Average 70m² apartment rent to average disposable household income ratio 

Year: 2012-2020

Area: City territory

*Source: National Statistical Offices, aggregated data from real estate intermediaries (Copenhagen, Budapest), AMRON-SARFIN survey (Warsaw) 

The affordability of owner-occupied housing (measured by the average purchase price of an apartment in a new building in relation to average disposable household income) has decreased, particularly in Prague, Budapest, Barcelona, and Amsterdam.

Chart: Average new 70m² apartment price to average disponsible household income ratio

Year: 2016-2020

Area: City territory

*Source: Deloitte, National Statistical Offices

When comparing the number of completed dwellings relative to the population, it is evident that Prague lags behind all other cities, with Warsaw and Copenhagen having a particularly large lead. However, the data regarding the number of completed apartments does not demonstrate a clear correlation between this figure and the availability of owner-occupied and rental housing.

The comparison clearly reveals the influence of political strategy. At one end of the affordability spectrum, we find Vienna with its robust urban and city-regulated housing policy, and on the other hand, we have Prague and Budapest, which rely on owner-occupation by inhabitants with low relative purchasing power. In this way, 55% of households in Prague and even 80% in Budapest live in owner-occupied housing, while in cities with the most affordable housing (Vienna and Copenhagen), only 20% of households do so.

Chart: Number of apartments built per 1000 inhabitants

Year: 2016-2021

Area: City territory

*Source: National Statistical Offices

We apply this optics on interpreting the available data on housing shortages vary significantly, with Vienna having the most systematic and extensive tracking. The other cities report similar or lower numbers of people in need of housing, but these target narrower groups and use less reliable counting methods, which likely underestimates the actual number of people in need. Prague and Milan have even higher numbers of people in need of housing.

*Source: Reports from national statistical offices, local governments and NGOs via FEANTSA