What is driving housing inequality? A new report from the HouseInc project has analyzed decades of data to find out why some people are getting ahead while others are being left behind. This report presents the results from testing the impact of selected economic, policy (political) and demographic factors on housing inequality trends.
The report looks at three main areas: inequality in affordability and precarity (can you pay the rent?), tenure inequality (do you own or rent?), and inequality in housing wealth (how much is your home worth?). The association between the trends in housing inequality in these three domains and six possible factors were then tested by authors (Martin Lux, Petr Sunega, Michael Škvrňák, Martina Mikeszová, Tomáš Hoření Samec, Petr Soukup (ISAS CR)):
- household income and income inequality;
- inflation and the interest rate;
- demographics;
- intergenerational housing-related resource transfers provided within the family;
- housing benefit policy; and
- the institutional and political context.
The report presents the results from an in-depth analysis of the association (a) between intergenerational resource transfers and housing wealth inequality; (b) between housing benefit policy and housing precarity; and (c) between institutional context (housing regime and ruling political ideology) and housing inequality in the affordability, tenure and wealth domains. In the data analysis, authors mainly focused on nine European countries that represent diverse population sizes, geographies, climates and housing and welfare regimes: Belgium, the Czech Republic, Estonia, Finland, Germany, Italy, the Netherlands, Romania and the UK. However, when data were available, they worked with larger samples of countries to increase robustness of the results, but also with smaller samples when data was missing even for some countries from the ‘core group.
Here are four key takeaways.
1. The “boom” paradox: when the economy grows, housing inequality often follows
Usually, a booming economy and rising incomes are seen as good things. However, the report found a catch: when people have more money to spend, housing prices and rents often skyrocket.
- The problem: Because we aren’t building new houses fast enough (low supply elasticity), higher demand just pushes prices up rather than creating more homes.
- The result: The gains of an economic boom are often “swallowed” by higher housing costs, which hurts lower-income families the most.
2. The “family bank” is a major player
In many countries (especially those where most people own their homes), getting help from family is now a bigger factor in housing success than having a high salary.
- The equalizer: If many families can pass down resources, it actually helps keep wealth inequality lower across society.
- The catalyst: If only the richest families can help their children, inheritance acts like a “catalyst” for inequality, creating a permanent divide between those with family wealth and those without.
3. Benefits help—But they don’t fix everything
Housing benefits (allowances) are vital for keeping people afloat, but the report warns they are a “band-aid,” not a cure.
- The gap: Even people receiving benefits often suffer from energy poverty, overcrowding, or poor maintenance.
- The lesson: Giving people money to pay rent doesn’t fix the fact that many houses are poor quality or inefficient.
4. Politics moves slowly
Can a new government fix the housing crisis overnight? The report suggests we should manage our expectations.
- Policy inertia: Housing systems are like large ships—they take a long time to turn.
- The surprise finding: Interestingly, “Left-wing” policies sometimes lead to higher housing wealth inequality in the short term because they focus heavily on rental support, while “State-focused” policies are better at making housing more affordable relative to income.
How do we fix it?
The report doesn’t just list problems; it offers a roadmap for change. Key recommendations include:
- Build more, faster: Figure out why we can’t build enough houses to keep up with demand.
- Tax the vacant: Use progressive taxes on vacant homes or short-term holiday rentals to free up space for residents.
- Fix up rental homes: Create incentives for landlords to renovate and make rental properties energy-efficient.
- Support all ways of living: Move away from just focusing on homeownership and invest in public, co-op, and non-profit rental housing.
All recommendations are available in the graphics accompanying this blog.
The bottom line
Housing inequality isn’t just about how much you earn; it’s a complex mix of family history, slow-moving politics, and a shortage of actual roofs. Solving it requires more than just subsidies—it requires a long-term plan to build better, fairer, and more stable housing markets.
Read the full HouseInc 2025 analysis here.
Download the accompanying graphic of policy recommendations.
