Housing inequality is a critical issue that affects millions across Europe, with disparities in affordability, homeownership accessibility, and housing quality varying significantly between countries. The HouseInc project aims to provide a comprehensive analysis of these inequalities, using robust data sources and indicators to drive deeper insights.
The “Selection of Datasets and Indicators for Selected Countries” report makes a valuable contribution to the existing research by considering not only the current level of inequality, but also its distribution among households in the selected “core” countries. Additionally, the report offers a thoughtful approach by comparing subjective and objective indicators of inequality.
This study defines a core group of eight countries – the UK, Finland, Germany, the Netherlands, Romania, Italy, Belgium, and Czechia – based on criteria such as data availability, housing regimes, and economic diversity. This selection ensures a well-rounded representation of various housing systems, from Western European models to post-socialist structures.
A crucial part of this research involved identifying reliable data sources for analysing housing inequality. Large-scale international surveys such as the EU Statistics on Income and Living Conditions (EU-SILC), and the Household Finance and Consumption Survey (HFCS) provided the backbone for this analysis. These datasets allowed researchers to examine a variety of indicators related to housing affordability, cost burdens, and financial disparities. The study also highlighted gaps in these datasets, particularly in subjective measures such as perceived housing burdens, which are increasingly important in understanding overall well-being.
Key indicators of housing inequality
The report identified multiple indicators to assess financial aspects of housing inequality, including:
- Housing cost-to-income ratio: Measures the proportion of income spent on housing.
- Residual income: Income remaining after housing costs.
- Overburden rate: Households spending above a critical threshold on housing.
- Housing precarity: A composite measure including overburden, overcrowding, and housing quality.
- Subjective affordability: Household perceptions of housing costs.
- Subjective overcrowding: Household perceptions of the shortage of space in a dwelling.
- Annuity-to-income ratio: A measure of affordability of owner-occupied housing.
- Homeownership accessibility: The ease of becoming a homeowner.
- Housing wealth: Distribution of wealth tied to housing assets.
Preliminary results from measurement of housing inequality in the determined core countries
One of the key findings of the report is that housing inequality is not a uniform issue but rather manifests differently across countries and income groups. For instance, homeownership accessibility varies significantly. Countries like Finland and Germany show relatively low disparities, while Italy and Czechia exhibit higher levels of inequality in access to owner-occupied housing. This suggests that not only broader economic factors, such as income distribution and wealth accumulation, but also institutional context (e.g. privatization during transformation period in the post-socialist countries) play a crucial role in determining who can afford to buy a home.
Similarly, rental affordability remains a challenge across all surveyed countries. Data reveals that tenants experience a significantly higher housing cost burden than homeowners, with a much greater proportion of renters spending over 40% of their income on housing costs. This disparity is especially pronounced in Italy, Estonia, and Romania, where homeownership rates are high, but affordability remains a challenge for lower-income households. On the other hand, countries with well-developed rental markets, such as the Netherlands and Finland, demonstrate lower variance in housing cost burdens.
An important aspect of the study was the introduction of more nuanced methods for measuring housing precarity. Traditionally, indicators like cost-to-income ratios and housing overburden rates have been used to assess affordability, but these fail to capture the full spectrum of housing challenges. By integrating factors such as overcrowding, poor housing quality, and neighborhood conditions, the researchers developed a more comprehensive approach to assessing housing inequality. The findings indicate that Romania has the highest level of housing precarity, with nearly half of households facing at least one major housing deficiency. In contrast, Belgium emerged as the country with the lowest levels of housing precarity.
Another key observation from the study is the discrepancy between objective and subjective housing indicators. In many cases, the percentage of households reporting housing costs as a “heavy burden” differs significantly from the proportion of households whose housing cost-to-income ratio exceeds the critical threshold of 40%. For example, in the Netherlands, the objective measure of housing cost burden was higher than the subjective reporting, whereas in Italy and Romania, the opposite was true. These variations suggest that cultural and economic factors influence how people perceive and experience housing affordability.
Authors of the report: Martin Lux, Petr Sunega, Martina Mikeszová (ISAS CR).
