Due to demand

Housing costs in the city three times higher than in the country

Worries about high rents affect one in eight families in our cities

(Bild: ©InsideCreativeHouse - stock.adobe.com)

Housing has become more expensive - especially for those who live in cities, while it has remained significantly cheaper in rural areas. "Only" around 4% of the population has to spend a high proportion of their money on housing there, compared to almost 13% in the city. This difference is particularly high here.

The threshold is that total housing costs must account for at least 40% of disposable household income. According to EU statistics from 2022, 4.2% of the population in rural areas had to pay this much for an apartment or house and are therefore considered "overburdened". For Austrians living in our cities, on the other hand, this rate is three times as high. Of them, 12.6% have to pay this much. This difference depending on the size of the place of residence is particularly high compared to other European countries. In Germany, for example, housing costs are generally higher, but the urban-rural difference is only around 30%. Even in Denmark, where 22.5% of city dwellers are considered to be overburdened by housing costs, living in smaller towns is only around half as expensive (see chart). According to Eurostat, the average EU household spends 18.7% of its income on housing, regardless of where it lives. 

Strong influx into cities fuels demand for housing
Economist Jan Kluge from Agenda Austria explains why city dwellers live so much more expensively than people in rural areas: "We have a particularly strong influx into cities, partly due to migration. As a result, the demand for housing there remains high. This means that if politicians want to artificially push down housing costs in the city, it will only fuel the incentive even more. That wouldn't make ecological sense either." In itself, increased municipal housing construction would help, but it does not deliver what was promised in terms of quantity, says Kluge, "and it would not be enough anyway given the high level of immigration."

(Bild: stock.adobe.com, Krone KREATIV)

 In order to make housing a more acceptable proportion of the household budget, the economist believes that a completely different approach is needed. "If the state wants to do something, then it has to start at the denominator of the calculation, i.e. increase incomes by leaving more net from gross." In concrete terms, this means further reductions in wage tax in line with the increase in housing costs. That wouldn't even make much of a difference, Kluge calculates. According to Eurostat, the proportion of household income spent on housing across Europe has only risen by just under one percentage point on average compared to before coronavirus.