Europe’s rents are on the rise: Who’s hardest hit? - European Data Journalism Network - EDJNet

European cities are facing a significant housing crisis as rents continue to rise, disproportionately impacting low-income earners and those in unstable jobs. The European Data Journalism Network (EDJNet), led by journalist Kata Moravecz, investigates the factors contributing to this crisis, emphasizing the urgent need for policy reforms to secure affordable housing for all.

Almost all major European cities are experiencing increases in rent, leading to a housing crisis. Low-income workers and those without stable employment are the hardest hit, often spending a large portion of their income on housing. Financial experts suggest that spending more than 30% of one’s income on rent is unsustainable, yet this guideline is increasingly unattainable for many. Middle-income earners also face challenges, with only a few cities allowing them to stay below this threshold.

The investigation collected rent-to-wage ratio data across 26 major European cities to identify the causes and potential solutions to the housing crisis. It was found that cities with higher nominal wages fare better. However, in cities where wages are already low, factors such as tourism and gentrification exacerbate the situation, causing rents to rise disproportionately.

Vienna stands out as a successful model, having avoided many of the issues faced by other cities through its extensive social housing stock and strict rent control policies. Conversely, Budapest, which lacks such policies, has seen a deterioration of its housing situation, driven by a government focus on home ownership rather than rental market regulation.

The report highlights the critical role of individual renters, particularly young workers and gig economy participants, in maintaining the urban ecosystem. As rents climb, the feasibility of living close to work diminishes, leading to long commutes that deter potential employees from accepting jobs in city centers.

Using data from Housing Anywhere, the report reveals that in every city analyzed, the average rent is unaffordable for low-wage earners. In cities like Budapest and Lisbon, rental costs can exceed 300% of a low wage earner’s salary. For middle-income earners, only four cities—Vienna, Turin, Helsinki, and Brussels—remain below the 30% threshold.

The report identifies several key factors driving this housing crisis: excessive tourism, particularly through platforms like Airbnb, and significant migration, both internal and international. While tourism converts residential properties into temporary accommodations, migration inflates demand in cities, pushing rents higher. For instance, Lisbon and Porto have seen an influx of tech workers, driving up costs for local residents.

All cities face limitations on new construction, resulting in low housing supply. Gentrification further complicates the issue, as wealthier residents move into poorer neighborhoods, pushing out existing tenants. Vienna's social housing system effectively mitigates this issue, while Budapest’s lack of tenant protections has worsened the situation.

The findings underscore an urgent call for policy interventions to protect tenants and promote the development of affordable housing solutions. Without such measures, Europe risks losing vital segments of its workforce, threatening the sustainability of its urban environments.