Inflation: Skyrocketing cost of living in Europe – How much we pay for rent, electricity, water [πίνακας] – 2024-08-23 18:31:53

Inflation in Europe may be showing signs of easing from the historic highs reached last year, but the cost of living continues to weigh on households and is the biggest concern for more than 90% of Europeans. The official figures are revealing.

Housing, water, electricity, natural gas and other fuels accounted for the largest share of household consumption in the EU, accounting for 24.1%. Food and non-alcoholic beverages followed with 13.6% and transportation with 12.5%. And as euronews points out, while the ranking of these categories has remained stable over the past 20 years, their relative weighting over time has changed.

Comparing the shares from 2002 to 2022, the most significant change was in housing, which increased from 21.1% to 24.1%. This represents a rise of 3 percentage points (pp) over the two decades. This means that if a household’s total expenditure was €1,000 in 2002, it would have spent €211 on housing. By 2022, this amount was 241 euros.

The increase highlights the financial burden of basic living costs for European households, likely driven by rising house prices and energy costs over the past two decades.

Looking at the percentage change, the share of health spending increased by 22%, compared to a 14% increase in housing. However, because the share of housing costs is significantly larger, the overall impact of rising housing costs is much larger.

Steady increase in the cost of living

Starting at just over 20% in the early 2000s, the share of household spending on housing and utilities rose steadily, peaking at nearly 25% in 2013. This period saw the most significant growth, highlighting the growing costs related to housing and utilities.

After a slight decline, the share rebounded during the Covid-19 pandemic, reaching a record high of 25.6% in 2020.

The overall increase in housing and utility spending over the past two decades shows that these costs have become an increasingly important part of household budgets, reflecting wider economic pressures and shifts in the cost of living across the EU.

In Ireland the most significant increase

In some countries, the increase was more pronounced, exceeding 5%. Between 2002 and 2022, Ireland saw the biggest increase, with a staggering 7.1% increase, followed by Spain and Italy with increases of 6.3% and 5.4%, respectively.

In 10 EU countries, growth exceeded 4%, highlighting a broad upward trend across the region. In our country, the corresponding percentage – according to Eurostat data, is 1.9%.

Several Eastern European countries, along with Sweden and the United Kingdom, saw a fall in the share of spending on housing. Romania, in particular, recorded the most significant decline, with a decrease of 4.1%, while Bosnia-Herzegovina and Serbia also experienced notable declines.

The Covid-19 period

During the Covid pandemic, the proportion of household expenditure on housing increased in almost all countries, reaching record highs. However, in 2022, as the pandemic subsided, this share began to decline.

Considering the peak levels seen during the pandemic, the overall increase in housing costs over the past two decades becomes even more impressive.

Which European countries spend the most on housing?

Housing costs as a percentage of total household expenditure vary considerably across Europe. In 2022, Slovakia took the lead with more than 30% of household spending being devoted to housing. Finland and Denmark followed closely behind, with shares of 29.6% and 29.1%, respectively. In Greece the corresponding percentage is 19.1%.

According to euronews, these figures show that Northern and Central European countries are facing significant financial pressures related to housing and utilities, likely due to higher energy costs or more expensive housing purchases.

In contrast, Southern and Eastern European countries such as Montenegro, Turkey and Albania have much lower shares, with Montenegro at just 11.6% and Turkey and Albania at 12.4% and 12.5% ​​respectively.

Rally in real estate prices and the housing crisis

The European housing crisis, decades in the making, is being felt from the Netherlands to Portugal, Greece to Germany and Britain. Prices and rents have skyrocketed, availability has collapsed and housing has become a political issue.

Between 2010 and 2022, property prices across the bloc of 27 EU member states jumped by 47%, according to a 2023 Eurostat report. In some countries, they almost tripled: Estonia saw a 192% increase . Only in two Member States, Italy and Cyprus, did prices decrease.

Rents, meanwhile, rose by an average of 18% over the same period, rising in all EU member states except Greece (where they rose by 37% since 2018). Some of the biggest increases were in Lithuania, up 144%, and Ireland, up 84%.

“Marshall Plan” in Europe

The lack of affordable housing and the rising cost of living have recently been at the forefront of national and European election campaigns. It is no coincidence that the head of the Commission, Ursula von der Leyen, when she was seeking re-election last month, made special references in her speech to the European Parliament.

“People are struggling to find affordable homes,” the president of the EU executive told the plenary in mid-July in Strasbourg. “I want this Commission to support people where it matters most, and if it matters to Europeans, it matters to Europe.”

In her policy guidelines for the next European Commission, von der Leyen stressed the urgency of tackling the housing crisis, proposing the first European plan for affordable housing and a commissioner responsible for the specific policy area, as the Socialists had demanded as a condition to support her second term.

So far there is a significant investment gap in social and affordable housing

“The Union should offer a housing plan that not only targets the truly needy, but responds to the crisis that affects everyone, you know: students, single-parent families, young workers…” David Rinaldi, director of policy at the Foundation, told Euronews. of European Advanced Studies (FEPS).

It is recalled that von der Leyen has given member states until August 30 to nominate two candidates for the college of Commissioners for the next five-year term. Only then will he decide who will head which portfolio – and what powers they will have.

The significant investment gap for the housing crisis

However, so far there is a significant investment gap in social and affordable housing and Member States can only use public funds to target the most vulnerable groups.

“In terms of state aid, we would like to see the recognition of social and affordable housing for everyone – beyond disadvantaged groups or social groups with fewer opportunities – as a service of general economic interest”, says Christophe Rouillon, president of the PES group, at the European Committee of the Regions (CoR).

The housing problem has so far not been a priority in discussions at EU level, despite pressure.

“The EU can influence housing through financial regulation, competition law, energy efficiency, regulatory and design standards, cohesion policy, climate action, urban/rural and social policies,” added Rouillon .

Lack of shelter

When it comes to tackling homelessness, which affects around 890,000 people across the EU, according to a 2023 report published by FEANTSA, there is still no concrete proposal for the political agenda.

The housing crisis is also an issue where it is important to share good practices, argued MEP Li Andersson (Finland/Left), chairman of the Employment and Social Affairs Committee, in an interview with Euronews.

“There are countries, for example Finland, that have worked a lot on homelessness and have had pretty good results for a long time, so it shows that these kinds of social problems can be solved,” he said.

Disposable income

In part, this has resulted in a steadily increasing proportion of households paying more than 40% of their disposable income for housing.

In Germany, where just over half the population lives in rented accommodation – one of the highest rates in the EU – the federal statistics office estimated last year that one in five households spent at least two-fifths of their net income on rent. As for Greece, it holds the sad first place in Europe, where housing costs for households exceed 40% of disposable income.

Source: ot.gr