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Housing costs vary significantly across European regions, with stark differences between urban and rural areas. The UK’s regional gap is the largest, yet it also includes regions with the lowest housing cost shares.

Inflation and Urban Housing Crises

Europe’s housing crisis has worsened with inflation reaching a 40-year high in 2022. Residents of capitals and major cities face higher housing costs compared to smaller towns. The Organization for Economic Co-operation and Development’s (OECD) “Regions and Cities at a Glance 2024” report highlights these disparities. The report uses housing costs as a percentage of disposable income, covering rents, mortgages, utilities, and home maintenance.

Housing costs consume a significant portion of household budgets. On average, OECD households spend one-fifth of their disposable income on housing. In 2022, the gap between the most and least expensive regions within a country averaged 10 percentage points (pp). In the UK and Italy, the disparity reached 16 pp and 14 pp, respectively.

Regional Insights: UK and Italy

UK: London Drives the Gap

In the UK, housing prices averaged 16.1% of disposable income. Greater London residents spent 24.4%, 51% above the national average. Scotland recorded the lowest share at 11.3%, while the North followed with 8.7%. This 15.7 pp gap represents a disparity of 181%. Despite the high regional disparity, the UK includes some of Europe’s least expensive regions for housing.

Italy: Naples and Marche in Contrast

In Italy, average housing costs consumed 25% of disposable income. Campania, including Naples, had the highest proportion at 31.2%, while Marche recorded the lowest at 17.1%. This represents a 14.1 pp gap. Other regions, such as Bolzano-Bozen and Trento, showed slightly smaller differences at 31.1% and 29.1%.

Other European Comparisons

Spain: Balearic Islands Lead

Spain’s average housing cost was 26.3%. The Balearic Islands topped the list at 30.4%, with Galicia at 20.3% being the least expensive. Murcia (30.2%) and Madrid (30%) closely followed the Balearic Islands, with Catalonia slightly lower at 27.1%.

Austria and Lithuania: Moderate Gaps

Austria’s housing cost gap reached 7.8 pp, with Vienna at 29.9% and Upper Austria at 22.1%. Lithuania’s Klaipeda had the highest share at 21%, while Alytus recorded 13.4%, a 7.6 pp gap.

Switzerland: Lake Geneva Takes the Lead

Switzerland’s Lake Geneva was the most expensive European region, with households spending 36.3% of disposable income. Ticino followed at 34.9%. Bratislava in Slovakia ranked third, with housing costs at 33.2%.

Smaller Gaps in Other Nations

Ireland, Estonia, and Sweden recorded smaller regional disparities, with gaps of less than 5 pp. However, housing costs still consumed substantial portions of disposable income, ranging from 17% in Estonia to 29.7% in Sweden.

Urban Costs, Homeownership, and Inequalities

The OECD report highlights higher housing costs in cities compared to rural areas. Urban residents typically spend a larger share of their income on housing. Lower homeownership rates are common in high-cost regions. For example, Vienna’s homeownership rate is 19%, compared to 74% in Burgenland. Similarly, Lake Geneva has a homeownership rate of 31%, while Greater London’s is 54%.

These findings underline the economic pressures faced by urban residents, where housing costs continue to strain household budgets.