The percentage of citizens who spend more than 40% of their salary on renting out their homes has skyrocketed in recent years
The unbridled rise in rents and the often insecure labor market, especially among the youngest, means that tenants have to spend an increasing part of their income on paying the rent of their home. According to Eurostat data collected by the Ministry of Transport, Mobility and the Urban Agenda, already in 2021 – before the sharp price increase last year – almost 41% of renting citizens were found to be financially overburdened by these costs. In other words, they spend more than 40% of their total income on the payment of the monthly payment.
The figure implies five percentage points more than last year, when 35.9% of tenants suffered from this situation. And everything indicates that the percentage will increase if they are known from the past year, marked by a staggering price increase. In concrete terms, and according to the figures of the Taxation Office, the average amount of leases formalized last December was already 14% more expensive than the previous year. And it is that many owners have decided to raise prices in their initial quotes to ‘compensate’ for the 2% ceiling that they would have to assume in the renovations.
In turn, prevailing rents have also become more expensive, albeit in a more stable manner with an average increase of 5% over the last twelve months.
According to data from Eurostat, Spain is the fourth country where you have to make more effort to pay the rent in terms of income. The first place is taken by Greece, where over 74.5% of tenants use more than 40% of their income to pay the monthly rent. In the Netherlands this is 48.3%, followed by 45.4% in Bulgaria. The European Union average is 21.2%.
With sky-high rents, many citizens opted to purchase last year, also in anticipation of the period of interest rate rises. In fact, and according to the latest data from the INE, more than 600,000 homes had already been bought and sold by the end of November, ahead of a record year-end since 2007, in the midst of the real estate boom.
In this environment, according to data from the most recent Housing and Land Observatory, the relationship between the price of housing and gross disposable income of households has also increased consistently in recent years, reaching 7.85 years, compared to the nearly seven years recorded by the purchase early 2017.
“The annual effort, for its part, has seen more stability, reaching 33.6% of disposable household income in the third quarter of 2022,” the document indicates. In 2017, however, that figure was much lower, at 30%.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
