European housing crisis widens as rent consumes rising share of wages

Europe is facing a widespread housing crisis characterized by a significant gap between property costs and household incomes. A study by researchers from the Vienna University of Technology indicates that at least 70% of Europeans live in areas where an average salary is insufficient to purchase a home larger than 75 square meters, even with a 30-year mortgage.

Financial disparities are driven largely by the ratio of rent to wages. In Southern Europe, rent consumes a disproportionate share of income; in Portugal, it can approach 85% of wages, while in Spain and Italy, it exceeds 47%. In contrast, German and French households spend significantly less of their income on rent, at approximately 20% and 26% respectively, despite higher absolute costs for energy and food.

To address these challenges, the European Commission is developing a regulatory framework to provide legal certainty and uniformity, potentially introducing “residential stress zones” to limit tourist rentals and second-home purchases. Meanwhile, in Greece, policy measures include extending VAT exemptions on new builds until 2030 and offering tax incentives to encourage owners to return vacant properties to the long-term rental market. Experts also highlight a mismatch between supply and demand, noting a shortage of small residential units and the need for tenant solvency certification to encourage landlords to participate in the market.