Between 1950 and 2023, the housing cost burden — approximated by the proportion of total household consumption expenditure spent on housing, water, electricity and fuel — has risen almost steadily in Europe and many other countries around the world.
- First, this trend can be explained by substantial improvements in the quantity and quality of housing. In fact, in some countries (e.g., Germany), per capita floor space has more than doubled since 1950. In developed countries, the availability of toilets, hot water and electricity rose from less than 50% of dwellings to almost 100% over the same period.
- Second, the increase in the housing cost burden is due to the higher rate of increase in housing costs compared to total consumer expenditures. Low-income households are particularly affected by this trend. Compared to high-income households, they spend a larger share of their consumption on housing. Such a deterioration in housing affordability can negatively affect health and education by reducing the residual income that could have been spent on them. This, in turn, can lead to lower incomes for these households, preventing them from closing the income gap with higher-income households.
- Third, the growing housing cost burden may be the result of the retreat of the state from social policy, including the removal of the strong rent control that was installed in many countries (including all European Union member states) during World War II and effectively froze housing rents.
Using longitudinal data from 23 European countries between 1981 and 2023, as well as and panel data model with fixed, HouseInc partners from DIW Berlin analyse the impact of housing policies such as rent control, housing subsidies and social housing on housing cost burdens and affordability gaps across income groups.
The results show that rent control and social housing policies reduce the proportion of housing costs for low- and high-income households alike, whereas housing allowances and social expenditure increase this proportion by enabling households to spend more on larger and higher-quality dwellings.
However, none of these policies appears to reduce the housing affordability gap between the two groups. These results are largely confirmed by various robustness tests, which include different proxies for housing quality and direct government subsidies.
The report includes a literature review (on the measures of inequality, the determinants of housing inequality and the impact of governmental policies), a study of long-term trends of housing affordability, and an econometric analysis.
The report is completed by a database of two related datasets. The first contains a complete set of legal acts that regulate the housing market. The second dataset contains intensity indices based either on the analysis of the legal acts presented in the first dataset or on publicly available data sources, such as the OECD and national statistical offices.
D3.4, includes an excel and additional guidebook (Authors: DIW Berlin)
In short
This comprehensive “Database of Housing Market Regulations” covers legal acts relating to housing regulation in the EU27 countries and the UK from 1980 to 2025. The database also includes indicators measuring the intensity of government housing policies, such as rent control, tenant eviction protection, social housing, housing allowances, housing rationing, and overall social expenditure. -> LINK to dataset (Excel file download) & -> LINK to additional material (guidebook).
