European House Prices Outstrip Rents

House prices have skyrocketed in the EU over the past decade, far outpacing the rate of growth for rentals. A new Eurostat report, released on 8 April, found that between 2010 and Q4 of 2021, house prices went up by 42 percent across the bloc, while rental prices increased by an average of 16 percent. Estonia, Hungary, and Luxembourg are seeing the steepest curves, with their average costs of house prices more than doubling in ten years, at +156 percent, +128 percent, and +124 percent, respectively.

As our chart shows, Europe is deep in a housing crisis. Prospective homeowners are having to navigate the rising costs of living - including on their own rents, gas, and electricity - making it harder for them to save up for increasingly expensive houses. It’s a situation perpetuated by the pandemic, when many people with lower paid jobs lost their incomes. According to Euractiv, this is being felt particularly in former EU communist countries, which it says, “were once leaders in social housing”, but whose cities like Prague are now seeing the effects of privatization. These rising prices are hitting the lowest income groups the hardest, which, the OECD explains, “makes it more difficult for people to get on the property ladder, affecting the ability of lower and middle-income families to accumulate wealth and to pass it on to future generations.”

The rental economy is part and parcel of this crisis too, with Estonia, Lithuania, and Ireland seeing rental prices shoot up at an even faster pace to those of their housing markets. The Independent.ie cites how in Ireland, this is partly due to landlords leasing out their places to holiday makers rather than long term tenants, while Selectra points to the issues of the thousands of empty and derelict homes across the island, as well as failings in policy.

Meanwhile, only three countries saw decreases in both their house prices and rental costs since 2010; Cyprus, Italy, and Greece.