- Not building enough (= insufficient supply). The reasons vary per country.
- Too many people, mostly due to immigration (= excessive demand, with supply failing to keep up... in some cases, it's virtually impossible to meet demand).
- Competition from outsiders e.g. wealthier people from richer countries and/or large investment funds.
Some countries have all three problems, while others may have only one or two. However, it seems that many governments continue to misdiagnose the problem, placing too much emphasis on factors that in reality contribute very marginally to the problem. This may be due to incompetence or simply whatever agenda they have at the time.
If I had to make a wild prediction, I'd say the problem will continue to get worse until the whole system (not just housing but many critical parts of the country) eventually collapses in many places.
I wrote this story. Thanks for reading. It is certainly not perfect but I hope it is useful. Would be good if our statistical authorities could read it and understand the data gaps that we face.
The data shown here makes the situation in Amsterdam/NL look a lot better than reality:
the number of months of gross salary needed to buy a single square metre (0.86 - 1.8)
18 years to repay, Amsterdam, 50m²
The average selling price per square meter is €8,600 against a €2,600 minimum wage, so that ratio is 3.3x, or 3.6x if you use net wages.
A 50m2 apartment is going for 400k-500k, meaning repayment will take 30+ years. Better housing suitable for a family, with two or three bedrooms, will be >600k.
Yes, salaries in NL can be much higher but it's still a bleak picture. Almost every young professional is priced out of the market.
I really like this article is focusing on the root cause, which is employment being more and more centralized towards big cities and the snowball effect this has which makes big cities more attractive for people looking for employment. If you don’t read the whole article at least read the conclusion part, which is very illuminating.
Unfortunately there isn't a single cause. Some people say we should create more jobs outside of cities. Some say we should build more flats inside cities. Some say we don't actually need to build more at all, but to distribute housing in a better way (some people own two houses, other own none).
I think it's a bit of everything, but if we decentralize too much, it becomes less energy efficient, and energy costs more in Europe compared to a lot of countries. If you decentralize, you need more fuel to get groceries, to go to work, to heat your home etc.
There is a good middle ground. Probably by creating more jobs and flats in cities with 50-200k inhabitants.
This sort of distribution effect is true in the US too. We have many rust belt cities that are shrinking. You would think that if people and the government cared about affordability then they would take measures to decentralize the jobs and spread them to shrinking cities through a density tax or job creation credit in specific zones, etc.
I used to work for a Big Tech company with a strong public liberal message. Not making any judgement, just stating a fact.
I then examined where they were opening their offices in a wave of rapid expansion. Almost invariably at the most expensive areas of each city. When I questioned that to the people in charge of their location strategy, they said "that's where the young people want to live".
"there is no obligation to move to major cities" but counterargument is "there is no obligation to create jobs only in major cities". Everyone monetizes this phenomenon, no one is stopping it.
> "there is no obligation to move to major cities" but counterargument is "there is no obligation to create jobs only in major cities". Everyone monetizes this phenomenon, no one is stopping it.
Cities are attractive for people because they present more opportunities: more things to do, more people to meet.
More people == more commercial opportunities, which translates to jobs.
Well the other side of RTO is if you're going to live in a lower cost of living place you should expect that you'll get paid less because it's not fair that you just get to pocket the savings and be a less effective teammate
> Worse, the statistic counts rents and mortgage interest but not mortgage repayment. A household paying €1,500 a month on a mortgage - of which €400 is interest and €1,100 is principal - shows up as spending €400 on housing. The other €1,100, the part that actually hurts, is invisible.
This guy lost me here, with the assertion that increased equity "hurts" / vanishes.
Presumably its AI slop? It's certainly a lot of charts / "effort" that have gone into analyzing some random datasets with no real revelation or conclusion.
The story is talking about the portion of your monthly budget occupied by housing. If you only "count" the interest on a mortgage payment, then you're ignoring a material amount of money out the door every month, and that would render the whole dataset questionable.
The only honest way to discuss "is housing too expensive?" is to ask "how much do you pay someone on the first of the month to live in your home or apartment?"
This can take several forms, but the majority are either:
* "My rent is $X;" or
* "My total mortgage payment, including interest and principal, is $X;" or, in some cases,
* "My total mortgage payment, including interest and principal, is $X, and I also have to pay $Y in condo fees / HOA fees / building fees."
That last category might just be an American thing; I have no idea. I just know that many if not most condo developments/buildings have an additional fee you have to pay even if you own your unit outright, and it can be significant.
> It's still money out of pocket each month, even if equity increases.
Exactly.
Building equity in this case is not a luxury, unlike what the Eurostat burden indicator thinks. Given the cost of renting, buying at very high prices is sometimes the only option to not face an even worse outcome in the future. There is simply no good option for millions of europeans.
You either pay your mortgage down or you pay your landlords down really. That part is basically even, but at least you get to own the house eventually in one case.
> This guy lost me here, with the assertion that increased equity "hurts" / vanishes.
I don’t know that the phrasing is great and it’s good to build equity as we both understand, but in terms of your monthly paycheck or ability to afford to do or buy things it seems crazy to me to only measure the interest and not the entire payment.
> Presumably its AI slop? It's certainly a lot of charts / "effort"
Even if is AI slop (and as a policy please stop insinuating something is AI slop) it’s not much worse than the torrent of dumb human only bloggers who are making asinine posts about how the AI bubble is 0vER.
In my experience with Poland the majority of housing is purchased by medical doctors whose salaries had skyrocketed during covid and continue as if the pandemic still existed. That's the last thing keeping this country's economy afloat. Everyone else without real estate is hopelessly screwed. Recently even doctors having portfolio of high tens of units domestically, they start purchasing in Spain and Italy.
In Italy indeed we have a big problem, especially in touristic regions, where houses are almost always priced for non-italian citizens, there are even specialized agencies who try to sell only to non italians (I have two near my house that just focus on Germans, another close by that focus on USA citizens). This is creating a bizzarre effect where most houses in towns are effectively empty for 9-11 months per year while the people actually working and living here cannot buy anything and are forced to live with their parents even longer than the usual
It surpises me that only 6% of "the Dutch" report that housing is a financial burden. Ask anyone here and they'll all agree the housing market is fucked and everything is way too expensive.
Statistics do not always match our personal experience. But it can still be "too expensive" while way better than it is happening in Portugal, Spain and France.
yes, but there are levels to the amount of mismatch
National averages are a terrible tool. Isolated per-country indexes are insufficient. No statistic is perfect, but the European authorities could - and should - try harder.
Forgot to point that I am the author of this data story.
This is what happens when you open your country to be bought by foreign "investors", as it happened with Portugal and Americans.
When you have countries much larger and wealthier than you, they will pump the housing market to unsustainability, driving the locals out of their houses.
But hey, GDP and the waiter wages have increased, so there's that.
Americans are experiencing much of the same despite being the richest country in... history. Immigration is a not insignificant part of it but real estate being the only thing most people can finance with leverage has serious footprint as well.
Americans "are experiencing much of the same" while staying in their country. That's why many opt for the rich expat life. I've lost count of the number of stories I've read about random Americans moving to Portugal because "it's so much cheaper here" and "life is so much better".
Same goes for Europeans moving to East Asia to live the high life and causing similar problems for the locals. The only difference is that, unlike in Europe, East Asian countries have some guardrails on property ownership to avoid being overrun by foreigners. E.g. you cannot own land, and most houses are on a lease.
yeah in NL for example they have a "shortfall" of a million houses, due to overly strict regulations scaring off developers. 40% of new builds need to be social housing, and we have the strictest environmental regulation in europe. Developers prefer germany or the UK.
In the popular cities which is where everyone wants to live, it's quite low.
They've been full for quite a while, turns out land in desirable places is not infinite and there's no supply. So don't increase demand by allowing wealthy foreigners to buy out everything.
The inability to build fast mass transit is what keeps this so true. High speed rail into nearby towns could / should change the amount of land available but nobody builds it except the Chinese. And Americans don’t even consider it
That's what "full" means in practical terms. Obviously the parent doesn't mean "the entire city is a contiguous matrix of one-cubic-meter boxes, each with a person inside". People will have different opinions on whether it's "full", of course, based on how much they are willing to fundamentally alter the nature of the location, traffic, desirability, etc.
This is true of every location, of course. Major metros are just where the population, and acceptance of density, is highest, so it's the obvious example to look at.
> So don't increase demand by allowing wealthy foreigners to buy out everything.
I’m not sure about the effect of “wealthy foreigners” since if they are wealthy they are probably competing for more expensive properties that your school teacher or grocery store worker aren’t.
But you’re on to something here which isn’t being addressed which is the effect of mass migration to some of these countries. Obviously the migrant workers too want to and gravitate toward the cities with the most jobs, which would place additional pressure on housing prices since they join an already hyper competitive pool of buyers.
- Not building enough (= insufficient supply). The reasons vary per country.
- Too many people, mostly due to immigration (= excessive demand, with supply failing to keep up... in some cases, it's virtually impossible to meet demand).
- Competition from outsiders e.g. wealthier people from richer countries and/or large investment funds.
Some countries have all three problems, while others may have only one or two. However, it seems that many governments continue to misdiagnose the problem, placing too much emphasis on factors that in reality contribute very marginally to the problem. This may be due to incompetence or simply whatever agenda they have at the time.
If I had to make a wild prediction, I'd say the problem will continue to get worse until the whole system (not just housing but many critical parts of the country) eventually collapses in many places.
A 50m2 apartment is going for 400k-500k, meaning repayment will take 30+ years. Better housing suitable for a family, with two or three bedrooms, will be >600k.
Yes, salaries in NL can be much higher but it's still a bleak picture. Almost every young professional is priced out of the market.
I think it's a bit of everything, but if we decentralize too much, it becomes less energy efficient, and energy costs more in Europe compared to a lot of countries. If you decentralize, you need more fuel to get groceries, to go to work, to heat your home etc.
There is a good middle ground. Probably by creating more jobs and flats in cities with 50-200k inhabitants.
I then examined where they were opening their offices in a wave of rapid expansion. Almost invariably at the most expensive areas of each city. When I questioned that to the people in charge of their location strategy, they said "that's where the young people want to live".
Cities are attractive for people because they present more opportunities: more things to do, more people to meet.
More people == more commercial opportunities, which translates to jobs.
This guy lost me here, with the assertion that increased equity "hurts" / vanishes.
Presumably its AI slop? It's certainly a lot of charts / "effort" that have gone into analyzing some random datasets with no real revelation or conclusion.
The story is talking about the portion of your monthly budget occupied by housing. If you only "count" the interest on a mortgage payment, then you're ignoring a material amount of money out the door every month, and that would render the whole dataset questionable.
The only honest way to discuss "is housing too expensive?" is to ask "how much do you pay someone on the first of the month to live in your home or apartment?"
This can take several forms, but the majority are either:
* "My rent is $X;" or * "My total mortgage payment, including interest and principal, is $X;" or, in some cases, * "My total mortgage payment, including interest and principal, is $X, and I also have to pay $Y in condo fees / HOA fees / building fees."
That last category might just be an American thing; I have no idea. I just know that many if not most condo developments/buildings have an additional fee you have to pay even if you own your unit outright, and it can be significant.
It's still money out of pocket each month, even if equity increases. I assume it "actually hurts" because it's the majority of the payment.
Exactly.
Building equity in this case is not a luxury, unlike what the Eurostat burden indicator thinks. Given the cost of renting, buying at very high prices is sometimes the only option to not face an even worse outcome in the future. There is simply no good option for millions of europeans.
I don’t know that the phrasing is great and it’s good to build equity as we both understand, but in terms of your monthly paycheck or ability to afford to do or buy things it seems crazy to me to only measure the interest and not the entire payment.
> Presumably its AI slop? It's certainly a lot of charts / "effort"
Even if is AI slop (and as a policy please stop insinuating something is AI slop) it’s not much worse than the torrent of dumb human only bloggers who are making asinine posts about how the AI bubble is 0vER.
They also often don’t match reality either.
yes, but there are levels to the amount of mismatch
National averages are a terrible tool. Isolated per-country indexes are insufficient. No statistic is perfect, but the European authorities could - and should - try harder.
Forgot to point that I am the author of this data story.
When you have countries much larger and wealthier than you, they will pump the housing market to unsustainability, driving the locals out of their houses.
But hey, GDP and the waiter wages have increased, so there's that.
Same goes for Europeans moving to East Asia to live the high life and causing similar problems for the locals. The only difference is that, unlike in Europe, East Asian countries have some guardrails on property ownership to avoid being overrun by foreigners. E.g. you cannot own land, and most houses are on a lease.
They've been full for quite a while, turns out land in desirable places is not infinite and there's no supply. So don't increase demand by allowing wealthy foreigners to buy out everything.
This is true of every location, of course. Major metros are just where the population, and acceptance of density, is highest, so it's the obvious example to look at.
I’m not sure about the effect of “wealthy foreigners” since if they are wealthy they are probably competing for more expensive properties that your school teacher or grocery store worker aren’t.
But you’re on to something here which isn’t being addressed which is the effect of mass migration to some of these countries. Obviously the migrant workers too want to and gravitate toward the cities with the most jobs, which would place additional pressure on housing prices since they join an already hyper competitive pool of buyers.