Housing has become more expensive – especially for those living in cities, while it has remained significantly cheaper in rural areas. ‘Only’ about 4% of the population has to spend a large part of their money on housing there; in the city it is almost 13%. This difference is particularly big for us.
The limit is that the total housing costs amount to at least 40% of the disposable household income. According to 2022 EU statistics, 4.2% of the rural population had to pay that much for an apartment or house and is therefore considered “overburdened”. However, for Austrians living in our cities, this figure is three times higher. Of those, 12.6% have to spend that much. This difference depending on the size of the place of residence is particularly large in our European comparison. For example, in Germany, housing costs are generally higher, but the difference between urban and rural areas is only about 30%. Even in Denmark, where 22.5% of city dwellers are considered overburdened by housing costs, living in smaller towns is only half as cheap (see graph). According to Eurostat, EU households spend an average of 18.7% of their income on housing, regardless of where they live.
The strong influx to cities stimulates the demand for apartments
Economist Jan Kluge from Agenda Austria explains why city dwellers live so much more expensively than people in the countryside: “We have a particularly strong influx to the cities, also as a result of migration. The demand for housing therefore remains high. This means that when politicians want to artificially reduce housing costs in the city, this only increases the incentive. That would not make sense from an ecological point of view.” More municipal housing would indeed help, but in terms of quantity it does not deliver what was promised, says Kluge, “and that would not be enough anyway given the large amount of immigration. .”
To make the share of housing construction in the household budget more bearable, you would have to approach it completely differently, says the economist. ‘If the state wants to do something, it must start with the denominator of the calculation, namely increasing income by keeping more net than gross.’ In concrete terms, this means a further reduction in payroll tax equal to the increase in payroll tax. housing costs. That wouldn’t even make a big difference, Kluge believes. For example, across Europe, according to Eurostat, the share of housing in family income has only increased slightly less than one percentage point higher than before Corona.
Source: Krone
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.
