Can you afford to live here? Europe’s cities ranked by rent-to-salary ratio

The article titled "Can you afford to live here? Europe’s cities ranked by rent-to-salary ratio" is published by Euronews and authored by Servet Yanatma. It addresses the growing financial burden of housing in Europe, highlighting the increasing share of household budgets devoted to rent, particularly in urban areas. This situation poses significant challenges for low-income earners and those on minimum wage, with some cities seeing rent consume nearly an entire salary.

According to Eurostat, high rent prices in city centers exacerbate the financial strain on residents. In several European cities, net salaries are insufficient to cover the rent for a one-bedroom apartment. The Mapping the World’s Prices report evaluates net monthly salaries and rents across 69 global cities, focusing on 28 European cities for comparison. Notably, average monthly net salaries vary greatly, from €151 in Cairo to €7,307 in Geneva, making Switzerland the country with the highest average salaries in Europe.

In Europe, the rent for one-bedroom apartments differs significantly, with London having the highest rent at €2,732. In contrast, Athens offers the lowest rent at €595. Additionally, cities like Zurich, Dublin, Amsterdam, and Geneva have rents exceeding €2,000, while Istanbul and Budapest maintain rents below €900. The article points out that understanding the rent-to-salary ratio is crucial, as it reflects the disposable income remaining after housing costs.

The rent-to-salary ratio is a critical metric to evaluate affordability. In Europe, this ratio ranges dramatically, with Geneva at 29% and Lisbon at 116%, indicating that salaries in Lisbon do not cover the rent. In London, single earners spend approximately 75% of their salary on rent, with similar figures for Barcelona and Madrid. Other cities with high ratios include Milan (71%), Rome (65%), Dublin (62%), and Athens (57%). Geneva stands out as the only European city where the ratio is below 30%, suggesting that while rent may be high, salaries are also substantial.

The article further compares European cities to global counterparts, noting that cities like Bogotá (120%) and Mexico City (118%) also face housing affordability challenges. In the United States, New York City has a high rent-to-salary ratio of 81%. The data highlight that while some cities can barely cover rent, others leave residents with minimal disposable income.

After accounting for rent, disposable incomes vary widely. Geneva and Zurich lead with disposable incomes of €5,174 and €4,638, respectively. Conversely, Lisbon shows a negative disposable income of –€202, indicating that the average salary does not suffice to cover rent. In Istanbul, an additional €13 is needed to meet rental obligations. Other cities with significant disposable incomes include Luxembourg (€3,725), Frankfurt (€2,726), and Copenhagen (€2,421).

The report underscores that higher housing costs are a persistent challenge in larger cities, with significant implications for residents' financial well-being. The increasing expense of housing and utilities in the EU over the past two decades is a trend that continues to shape the landscape of urban living, making the need for sustainable housing solutions more pressing than ever.