EU housing affordability ratio rises as prices outpace income over decade

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EU housing affordability ratio up

Highlights

Eurostat reports the EU house price-to-income ratio in 2025 is 6.8% higher than in 2015, reflecting property prices outpacing income growth.
Portugal leads EU increases with a 60.8% rise in the house price-to-income ratio from 2015 to 2025, while Romania posts a 42.8% decline.
Despite some easing in 2023 and 2024, the ratio returns above its long-term average in 2025 by 0.03%, indicating continued EU housing affordability pressures.

Decade-long shift in housing affordability

As reported by Eurostat, the EU house price-to-income ratio in 2025 is 6.8% higher than in 2015, indicating that residential property prices have increased relative to household income over the period.

The indicator compares changes in house prices with changes in per capita household income against a base year. It rises when home prices increase faster, or fall more slowly, than income; it declines when income growth outpaces house prices, and it remains unchanged when both move at the same rate.

Across the bloc, developments vary considerably. The ratio increases in 17 EU countries and falls in 10, showing that the overall EU trend masks large differences in national housing markets.

Portugal leads increases as post-2022 easing proves limited

Portugal records the largest increase in the house price-to-income ratio between 2015 and 2025, at 60.8%, followed by the Netherlands at 34.3%, Hungary at 26.5%, Czechia at 25.8% and Spain at 24.5%. At the other end of the scale, Romania posts the steepest decline at 42.8%, ahead of Finland at 25.2% and Bulgaria at 16.2%.

Eurostat notes that these figures measure price changes relative to income changes over time, rather than ranking countries by the absolute cost of housing against income levels. A separate standardised measure, which compares the ratio with its long-term average since 2000, shows two clear peaks in 2007 and 2022, when the indicator stands 7.9% and 7.4% above its long-term average, respectively.

Between those peaks, the ratio drops to 6.4% below its long-term average in 2014 before rising again. After easing in 2023 and 2024, it edges back above the long-term average in 2025 by 0.03%, suggesting affordability pressures persist across the European housing market.

Our earlier article on Mario Draghi’s warning about the costs of restrictive monetary policy highlighted the risk that keeping interest rates above growth rates can worsen debt dynamics and ultimately undermine long-term investment. It also noted his call for central banks to prioritize inflation control while avoiding unnecessary damage to growth, alongside EU-level measures such as deeper market integration and targeted funding to support productivity-enhancing investment.

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