Housing costs are constantly rising for households in the eurozone, including Greece, due to increases in mortgage repayment installments due to high interest rates, high rents and higher utility company bills (electricity, natural gas, water, etc. ). This has resulted in the proportion of households in the single currency area who estimate they will be late paying rent or bills to 20% based on January 2024 figures, up from around 15% in 2023. The proportion has also doubled and it reaches almost 30% for late mortgage payments. Average housing costs are estimated to have risen by 10.2% since July 2022, when interest rate hikes began.
In our country, the total housing burden is calculated by the ECB at an average of 400 euros per month if housing loans are excluded. Together with mortgages, this average cost rises to 600 euros. These amounts put Greece in last place among the 11 specific countries in the report in absolute amounts – not counting incomes.
If the declared incomes are taken into account, the ranking changes significantly, with our country moving into second place in terms of the ratio of housing costs to income.
According to the ECB, the relevant percentage is 28% if the cost of housing loans is not calculated and 32% if housing loans are also calculated. Essentially, based on this measure, Greece is higher as a ratio of housing costs to incomes even than households in rich countries such as Germany, the Netherlands and France.
This results from new data that the European Central Bank published yesterday in its financial bulletin entitled “How big is the housing burden of households?” Data from the ECB Consumer Expectations Survey”, where Greece is specifically mentioned. The figures refer to the 11 largest economies in the eurozone.
Index
On average across eurozone countries, housing costs take up around 20% of disposable income for owners, 40% for renters and 35% for those living in a home with a mortgage, the ECB says. However, as noted, this differs across income groups, with the housing cost index rising slightly for the top 20% of incomes among households with mortgages and renters. This cost ratio appears to remain fairly stable for the bottom 50% of incomes, the ECB report says.
“This difference reflects, on the one hand, the fact that higher-income households are more likely to take out mortgages and generally do so for larger amounts, while, on the other hand, there has been stronger income growth for lower-income households. This is likely to be partly attributed to the recent targeted income support measures implemented by the largest euro area governments,” report the economic bulletin’s editors, Homer Kouvavas and Desislava Rusinova.
According to the ECB, in the period from July 2022 – the start of the rate hike cycle – to January 2024 the average housing cost reported in the Survey of Consumer Expectations rose cumulatively by around 10.2%, compared to cumulative rise in the Harmonized Index of Consumer Prices by 5.5% over the same period.
