Housing affordability and poverty in Europe: on the deteriorating position of market renters

Overview of the Study and Its Publication

The article “Housing affordability and poverty in Europe: on the deteriorating position of market renters” is published online by Cambridge University Press on 25 January 2024. It is authored by Rod Hick, Marco Pomati and Mark Stephens, researchers with extensive experience in European housing and social policy analysis. The paper examines trends in housing affordability across 27 European countries between 2010 and 2018, using EU‑SILC microdata and a range of macro‑level indicators.

Core Findings on Affordability Trends

Across the ten‑year period, average housing cost‑to‑income ratios remained relatively stable in most nations, contradicting widespread claims of a generalised affordability crisis. Notable exceptions include Greece, where cost burdens rose sharply, and Bulgaria, which also showed a clear increase. The analysis distinguishes two key measures: (1) the EU housing cost‑overburden ratio (households spending > 40 % of disposable income on housing) and (2) a High‑Cost Low‑Income (HCLI) indicator that adds a poverty threshold after housing costs. Both measures reveal that market renters face higher risks than mortgaged homeowners, and that the relative disadvantage of renters has intensified throughout the period.

Key Quantitative Results

• In 2018, the EU cost‑overburden rate varied widely, from under 10 % in several northern countries to over 30 % in Greece and Bulgaria.
• Over 90 % of market renters who are cost‑overburdened also fall below the after‑housing‑cost poverty line, whereas only 25‑75 % of overburdened homeowners do so.
• Macro‑level regression shows that GDP per capita explains a 30‑percentage‑point difference in cost‑overburden incidence between the poorest and richest countries.
• The at‑risk‑of‑poverty (AROP) rate adds another 15‑plus percentage‑point gap, while rent‑regulation stringency and housing‑allowance coverage each shift burden by roughly 15 percentage points.

Determinants of Housing Cost Burdens

Economic variables dominate the explanation of affordability problems. Higher national GDP per capita and lower AROP rates are associated with fewer households experiencing cost overburden, both between countries and within countries over time. Housing‑specific factors also matter: greater coverage of housing allowances and stricter rent‑regulation correlate with lower burden levels, but variables such as total residential loans‑to‑GDP or the share of mortgaged owners lose significance once economic controls are added. The study therefore highlights policy levers—rent regulation and housing‑allowance programs—as effective tools for mitigating affordability stress.

Tenure‑Specific Insights

The research confirms that market renters are disproportionately affected. Even after controlling for dwelling characteristics, household composition, and income deciles, renters’ odds of cost overburden remain higher than those of owners. Interaction models reveal a statistically significant worsening of renters’ position from 2010 to 2018, independent of compositional changes. This suggests that tenancy status has become an increasingly salient social divide in European housing markets.

Implications for Sustainable Housing Policy

For a pan‑European audience focused on sustainability, the findings stress that affordable housing cannot be separated from broader economic conditions. Strengthening social safety nets—through expanded housing allowances—and implementing robust rent‑regulation frameworks can reduce housing cost pressures without compromising market stability. Moreover, targeting support to market renters can help address the growing inequality between renters and owners, promoting more inclusive, sustainable urban environments.

Data Sources and Methodology

The analysis relies on EU‑SILC survey data (2010‑2018) for 27 countries, excluding Denmark (missing mortgage data) and Luxembourg (questionable mortgage data after 2016). Multilevel logistic regression models incorporate three levels: households, country‑years, and countries. Macro‑level variables include log GDP per capita, AROP, total residential loans‑to‑GDP, mortgaged homeownership share, housing‑allowance coverage, and rent‑regulation stringency. Model fit is assessed via AIC and log‑likelihood, with the best‑fitting specifications combining economic and housing‑policy variables.

Conclusion

The study provides robust evidence that, while overall housing affordability ratios have not deteriorated dramatically across Europe, market renters face a rising burden that is closely linked to macro‑economic conditions and policy environments. Addressing these challenges through targeted housing allowances and rent‑regulation can advance sustainable, equitable housing outcomes for all European citizens.