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.
Thanks for doing it. I love your approach. I'd love to see something similar that looks more deeply at areas that have a much larger housing market available to a particular job due to a really integrated mass transportation network.
I think this is a key detail people often miss. In other words a particular job in a particular neighborhood is great but if it can only be accessed by a small number of people in that neighborhood then it's quite a different dynamic than if a whole metropolis can essentially work and live anywhere within commutable distance.
And there are secondary components of this.. for example access to people who provide child care is easier in a well integrated metropolis than a federated byzantine instead of neighborhoods.. and childcare, school access, secondary care options are all critical components similar to housing hosts for families
That would be an entire study in itself! I am for now trying to highlight that statistical authorities need to get their data act together at least for basic data. Potentially, they would do a much better job than I did.
Only suggestion is to ease the reader’s journey by telling them the entire journey as a summary of front. Not a tldr but a paragraph or two “overview” with the key points and conclusions.
I am happy that you find the analysis helpful. I would be very curious so see what comes out of your own analysis for California. Please do reach out when you publish it.
Which parts of the writing are yours, and which were by LLMs? The density of LLM constructs here is very high, and the style doesn't feel consistent with your old blog posts. (And I wish it was written in the style of those older posts, which read clearly human).
Like, did you write this in another language and use LLMs to translate? Write an outline and LLMs wrote out the rest? Write this amount of text that was then edited by LLMs?
My blog posts are written more slowly - they are smaller and have low frequency. I write them on my own.
This text was drafted by myself and Claude Code "improved" the English, with lots of interference and rewriting from me - I can see that you do not like the "improvements" and maybe the overall result is not as good as it should. Not being an English native it is harder for me to judge (it does look OK to me) but this comment of yours is important.
I will consider rewriting this calmly. But it was important to get that data out - we have a social emergency in several countries.
As a data point for you, using LLMs to "improve" your English nowadays has the opposite effect. I'd rather have spelling/grammar errors than read LLM output as an article.
For what it’s worth, I would much rather read quirky ESL English than Claudish. Claudish gives me a strong impression of laziness/SEO/race-to-the-bottom/enshittification/slop. Quirky ESL English gives the exact opposite impression: there’s a real person on the other end who’s really trying!
(Also, your English is clearly very good, and doesn’t even need a cleanup.)
I read the entire article, and it was very well written. I had no problems reading any of it.
I have come to loathe the posts from people who are so filled with AI angst (hate) that they're looking to jump on anything they can. I would ignore the previous suggestion.
I'm certain that your first draft would have read better than the Claude-edited version, no matter how sloppy and raw. When the text is obviously AI-generated, it is impossible to tell whether you're reading a human's thoughts and original research or if you're reading the result of a three sentence prompt.
It is in general very hard to obtain feedback for something like this - so thanks a bunch for the positive and negative feedback.
From the feedback, I adjusted several parts of the text manually without changing the meaning of anything nor touching the data.
That said, it was not my intention to produce this text with the informal tone I use on my blog. My blog has a very nichy audience whereas I expected (hoped) that this text would reach a wider population. Maybe it will, maybe it won't.
What I don't understand is why the post is flagged :-\
Despite having an "elephant in the house" section, TFA mistakes a goat for an elephant. The real elephant is deregulation and the financialization of housing, i.e. allowing housing to turn from a commodity into an investment vehicle.
I can see at least four ways how this is happening today:
(a) Allowing private equity to accumulate large swathes of housing. No explanation needed. These purchases are made to turn a profit, and they will do. Whatever that takes: bribe, extort or steal.
(b) Banks giving individuals cheap financing for a second, third or fourth house. This was very common in the Netherlands. I.e. if you're reasonably well-off, a bank would give you a huge % loan for your second house while you still haven't paid off the first one. Your first house becomes a rental that pays itself off, and you pay off the second with your earnings. This effectively means that lower-income households are forced to rent perpetually.
(c) Counting the purchase of a house as an "investment" towards Golden Visa eligibility. This is very common in Portugal and Greece and effectively sets a floor for house prices. Everything else is then adjusted accordingly.
(d) Short-term rentals in popular destinations. Enough said.
TFA is essentially using number crunching to whitewash decades of bad housing policies. I'm not in a position to tell whether that was the goal, but it definitely is the result.
Imagine housing in these markets was like cars (or housing in Japan). Houses are worth less every year, no one wants to buy a old house for full price, housing is relatively plentiful + cheap, rents are low.
Private equity wouldn't buy houses even if there was financing since they would lose money. No one would keep their first house and rent it out as they accumulate more houses, because they'd lose money.
In fact if you started doing those activities it wouldn't change the housing market, you'd eventually lose enough money that you would have to stop.
Given a fixed housing supply, increasing demand, and no ability to increase the housing supply, removing market speculation may produce some changes in price, but they're not causing the underlying lack of houses, merely profiting off of if. An effective way to drive them out is to build a lot of housing (aka fix the market).
> Given a fixed housing supply, increasing demand, and no ability to increase the housing supply
The housing supply is naturally inelastic, meaning, the ability to increase it is limited. For example, currently a significant part of the US construction capacity is tied up in building data-centers, increasing it is near impossible at anything approaching a reasonable cost, and even if it was possible, doing it would create problems in the future - this is a proven fact, not a conjecture.
> removing market speculation may produce some changes in price, but they're not causing the underlying lack of houses, merely profiting off of if.
You aren't connecting the dots. As it is today, both housing and data-centers are largely driven by speculation - on a mass scale. You severely underestimate the scope and role of speculation in today's markets - yes, we can dream about some imaginary world where competition, demand and supply solve everything but the reality is very different.
My relatives who are nurses/tradespeople don't earn much, but since they live in LCOL/MCOL areas, most of them have always owned houses with hot tubs and garages in nice quiet areas. Meanwhile my big fancy tech job netted me roommates or small apartments in areas with frequent vehicle break-ins, otherwise I'd have needed to spend 50% of my TC on housing or commute 3 hours a day.
I finally got a job in a MCOL area and it's such a breath of fresh air. Yes my TC is lower, but for <$4k a month, I have a house in a nice area 30 minutes from the office AND I'm allowed to have pets. In the Bay Area or NY, pet friendly 3000sf houses like mine are rare, especially if you're filtering out long commutes and high crime areas. At best, I'd be getting a $2.5M mortgage or spending $8k on rent for a smaller house with a smaller yard, and my commute would be 90+ minutes a day.
It absolutely sucks that so many companies think it's impossible to open smallish offices in MCOL/LCOL areas that would transform their employees financial lives. Guess they're always optimizing for overhead cost per employee.
The data shown here makes the situation in the Netherlands 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 in Amsterdam is €8,600/sqm against a €2,600 minimum wage and €4,500 average, so that ratio is actually 2x - 4x. A 50m2 apartment is going for 400k-500k, repayment will take 30+ years. Better family housing with two or three bedrooms crosses >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.
From your numbers, the Amsterdam housing purchase effort is 8600 / 2600 = 1.91
But the article calculates averages at a NUTS-3 region level. It would be region NL32B (Greater Amsterdam) where the ratio is 1.1. That explains the difference.
As for the mortage:
8600*50 = 430k.
As you say, this does not fit repayment in 30 years for a single payer receiving 4500 gross.
It is borderline doable in 40 years with 3% interest rate.
So reality in an area with this price is different from the reality of the surroundings. This gets averaged at NUTS-# level. But hey, Eurostat averages it at a country level. So this is progress, I guess.
It was a bit of a long read and started losing focus towards the end and goes around the same concept in different words. It is not clear to me if wages are adjusted every year (e.g. 2-4% to adjust for inflation) during the mock example calculations of repaying a 50m2 apartment. The odd thing about most mortgages is that they lock in a price of today for 5-30 years, but typically your wage does increase, hence the years to pay back the mortgage might technically be lower than calculated. Even if the current analysis does not cover this, I actually thought the years to pay back the mock loan are not that bad in most of these places. Sure 50m2 is small, but it uses only a single income and does not include any non standard income. It would be important to get net salaries in these regions, but it will make it an almost impossible task.
> I actually thought the years to pay back the mock loan are not that bad in most of these places.
But people don't live in most places - most people leave in the worst places, when it comes to purchasing houses.
The number of years calculated per NUTS-3 region does not include the years one needs to save for the 10% deposit plus taxes plus safety cushion. It is written in the article.
I should have clarified in most of the high density areas except Paris. The annual income adjustment question relates to the years to payback the loan, which does not affect the 10% upfront deposit. The way you calculate it now I think is using 45% of net salary (70% of gross) to repay the loan, but is this based on a static current wage applied across the entire annuity of the loan? As of right now, I think this section does not help the case much for some, some believe paying back a mortgage over 30 years is expected, and you get equity, currently only Paris goes above 30 years to repay the mock 50m2 appartment in the initial analysis, perhaps indicating you need more granular data for the ultra dense regions or a more sophisticated way of calculating this that might be closer to reality in each of these unique dense areas.
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.
"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.
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".
These were rental-heavy, 1/2 bedroom rich, ultra gentrified high cost locations. As the offices grew and the "young people" started getting married and buying property, they would have to move far away.
Some surveys are showing younger generations being more concerned with cost. But I wonder if location preference would change if given other options. For example, if the job market was better in smaller cities, would they want to go there instead? For example, if you had smaller cities that were similar to "college towns", I would imagine many younger people wanting to live there. Even as they get older, if they move to the suburbs, the commute wouldn't be as bad, etc.
We see some of that effect with places like State College PA with it's growth, decent job market, a couple hours from a larger city (Pittsburgh).
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.
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 possessing already 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 only contact Germans, another close by aimed to 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
Young Italians courteously emigrate for work, to leave space for rich Germans and Americans... but increasingly there are no young people in Italy anymore, or in many other EU countries. Hopefully the growth of real estate market is worth it.
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.
- The elderly don't have a problem
- The seniors don't have a problem
- The millennials that bought in 2021 or before don't have a problem, in fact they made 200-300k tax free within 5 years
- The youths that still live with their parents don't have a problem
- The youths that still live their parents because they can't afford to move out don't have a problem making their mortgage because they don't have one.
It's the wrong statistic! Either you earn enough or bought early enough to afford the house and the mortgage is not a financial burden, or you're not getting the mortgage.
Heck, even in my life my 2700 euro mortgage (of a very regular house) isn't a financial burden. My partner and i just about make ends meet. But we can't divorce and we can't get cancer. If that happens then yes, it's back to our parents with a child at 38-years-old.
This article is illuminating in that it demonstrates something many of us may have been thinking for a long time; one of the big drivers has been job concentration. I guess the life-hack takeaway is to find a great job not near an urban center? Remote work from the sticks and you're rich!
> 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.
> 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.
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.
yeah most countries have version of that: service charge (and ground rent) in the UK. Not usually supposed to be very expensive, but service charge can be predatory: in London it can be in the thousands of £ for no apparent reasons. There's all sorts of messed-up incentives driving up this service charge, too:
- The freeholder (owner of the building itself) is in charge of the maintenance of the building, usually delegating it to a management company
- However the freeholder is not responsible for _paying_ for maintenance, that's what service charge for the flat owners (leaseholders) is for.
- So the freeholder has no incentive to look for a cheap management company, or to do preventative work, as they don't pay for maintenance
- The management company does not have incentives to be cheap and do preventative work either, as their client (the freeholder) is not the payer.
- Where it gets really fun is that management companies actually _give a kickback_ to freeholders on maintenance costs, to get their business. So when leaseholders are charged £100 for maintenance, £2 of that goes back to the freeholder!
- So the freeholder actually has an incentive for maintenance to be _expensive_, it's a source of income.
It's incredibly fucked up, I don't understand how it's legal. Add onto that building insurance shenanigans and you get service charges of £3k or £4k for a one-bed flat (I've seen up to £8k). Which makes the flat entirely unsellable of course, so the flat owners are stuck in sometimes _very_ desperate situations.
Yes, the way to make housing more affordable is to suppress raw land costs and to increase the margins on converting land into places for people to live and work.
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
Well then you need to bring down the salary in the major metro which exasperates the cost of living crisis there and/or causes flight of people out to the cheaper places causing the people previously in them to report a cost of living crisis
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.
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.
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.
It seems like beliefs in overly privatized processes is standing in thexway - why not just make a department that builds or contracts to build the social housing
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.
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.
Thanks for doing it. I love your approach. I'd love to see something similar that looks more deeply at areas that have a much larger housing market available to a particular job due to a really integrated mass transportation network.
I think this is a key detail people often miss. In other words a particular job in a particular neighborhood is great but if it can only be accessed by a small number of people in that neighborhood then it's quite a different dynamic than if a whole metropolis can essentially work and live anywhere within commutable distance.
And there are secondary components of this.. for example access to people who provide child care is easier in a well integrated metropolis than a federated byzantine instead of neighborhoods.. and childcare, school access, secondary care options are all critical components similar to housing hosts for families
That would be an entire study in itself! I am for now trying to highlight that statistical authorities need to get their data act together at least for basic data. Potentially, they would do a much better job than I did.
A ton of interesting info.
Only suggestion is to ease the reader’s journey by telling them the entire journey as a summary of front. Not a tldr but a paragraph or two “overview” with the key points and conclusions.
Thank you so much. Let me see if that fits, because the text is already quite large.
One of the best resources I've come across via HN. Thank you so much. Will apply it to my next work on California housing.
I am happy that you find the analysis helpful. I would be very curious so see what comes out of your own analysis for California. Please do reach out when you publish it.
Which parts of the writing are yours, and which were by LLMs? The density of LLM constructs here is very high, and the style doesn't feel consistent with your old blog posts. (And I wish it was written in the style of those older posts, which read clearly human).
Like, did you write this in another language and use LLMs to translate? Write an outline and LLMs wrote out the rest? Write this amount of text that was then edited by LLMs?
My blog posts are written more slowly - they are smaller and have low frequency. I write them on my own.
This text was drafted by myself and Claude Code "improved" the English, with lots of interference and rewriting from me - I can see that you do not like the "improvements" and maybe the overall result is not as good as it should. Not being an English native it is harder for me to judge (it does look OK to me) but this comment of yours is important.
I will consider rewriting this calmly. But it was important to get that data out - we have a social emergency in several countries.
As a data point for you, using LLMs to "improve" your English nowadays has the opposite effect. I'd rather have spelling/grammar errors than read LLM output as an article.
For what it’s worth, I would much rather read quirky ESL English than Claudish. Claudish gives me a strong impression of laziness/SEO/race-to-the-bottom/enshittification/slop. Quirky ESL English gives the exact opposite impression: there’s a real person on the other end who’s really trying!
(Also, your English is clearly very good, and doesn’t even need a cleanup.)
I read the entire article, and it was very well written. I had no problems reading any of it.
I have come to loathe the posts from people who are so filled with AI angst (hate) that they're looking to jump on anything they can. I would ignore the previous suggestion.
I'm certain that your first draft would have read better than the Claude-edited version, no matter how sloppy and raw. When the text is obviously AI-generated, it is impossible to tell whether you're reading a human's thoughts and original research or if you're reading the result of a three sentence prompt.
It is in general very hard to obtain feedback for something like this - so thanks a bunch for the positive and negative feedback.
From the feedback, I adjusted several parts of the text manually without changing the meaning of anything nor touching the data.
That said, it was not my intention to produce this text with the informal tone I use on my blog. My blog has a very nichy audience whereas I expected (hoped) that this text would reach a wider population. Maybe it will, maybe it won't.
What I don't understand is why the post is flagged :-\
Despite having an "elephant in the house" section, TFA mistakes a goat for an elephant. The real elephant is deregulation and the financialization of housing, i.e. allowing housing to turn from a commodity into an investment vehicle.
I can see at least four ways how this is happening today:
(a) Allowing private equity to accumulate large swathes of housing. No explanation needed. These purchases are made to turn a profit, and they will do. Whatever that takes: bribe, extort or steal.
(b) Banks giving individuals cheap financing for a second, third or fourth house. This was very common in the Netherlands. I.e. if you're reasonably well-off, a bank would give you a huge % loan for your second house while you still haven't paid off the first one. Your first house becomes a rental that pays itself off, and you pay off the second with your earnings. This effectively means that lower-income households are forced to rent perpetually.
(c) Counting the purchase of a house as an "investment" towards Golden Visa eligibility. This is very common in Portugal and Greece and effectively sets a floor for house prices. Everything else is then adjusted accordingly.
(d) Short-term rentals in popular destinations. Enough said.
TFA is essentially using number crunching to whitewash decades of bad housing policies. I'm not in a position to tell whether that was the goal, but it definitely is the result.
I think you have cause and effect reversed.
Imagine housing in these markets was like cars (or housing in Japan). Houses are worth less every year, no one wants to buy a old house for full price, housing is relatively plentiful + cheap, rents are low.
Private equity wouldn't buy houses even if there was financing since they would lose money. No one would keep their first house and rent it out as they accumulate more houses, because they'd lose money.
In fact if you started doing those activities it wouldn't change the housing market, you'd eventually lose enough money that you would have to stop.
Given a fixed housing supply, increasing demand, and no ability to increase the housing supply, removing market speculation may produce some changes in price, but they're not causing the underlying lack of houses, merely profiting off of if. An effective way to drive them out is to build a lot of housing (aka fix the market).
> Given a fixed housing supply, increasing demand, and no ability to increase the housing supply
The housing supply is naturally inelastic, meaning, the ability to increase it is limited. For example, currently a significant part of the US construction capacity is tied up in building data-centers, increasing it is near impossible at anything approaching a reasonable cost, and even if it was possible, doing it would create problems in the future - this is a proven fact, not a conjecture.
> removing market speculation may produce some changes in price, but they're not causing the underlying lack of houses, merely profiting off of if.
You aren't connecting the dots. As it is today, both housing and data-centers are largely driven by speculation - on a mass scale. You severely underestimate the scope and role of speculation in today's markets - yes, we can dream about some imaginary world where competition, demand and supply solve everything but the reality is very different.
My relatives who are nurses/tradespeople don't earn much, but since they live in LCOL/MCOL areas, most of them have always owned houses with hot tubs and garages in nice quiet areas. Meanwhile my big fancy tech job netted me roommates or small apartments in areas with frequent vehicle break-ins, otherwise I'd have needed to spend 50% of my TC on housing or commute 3 hours a day.
I finally got a job in a MCOL area and it's such a breath of fresh air. Yes my TC is lower, but for <$4k a month, I have a house in a nice area 30 minutes from the office AND I'm allowed to have pets. In the Bay Area or NY, pet friendly 3000sf houses like mine are rare, especially if you're filtering out long commutes and high crime areas. At best, I'd be getting a $2.5M mortgage or spending $8k on rent for a smaller house with a smaller yard, and my commute would be 90+ minutes a day.
It absolutely sucks that so many companies think it's impossible to open smallish offices in MCOL/LCOL areas that would transform their employees financial lives. Guess they're always optimizing for overhead cost per employee.
The data shown here makes the situation in the Netherlands look a lot better than reality:
The average selling price in Amsterdam is €8,600/sqm against a €2,600 minimum wage and €4,500 average, so that ratio is actually 2x - 4x. A 50m2 apartment is going for 400k-500k, repayment will take 30+ years. Better family housing with two or three bedrooms crosses >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.
Hi,
Author here.
From your numbers, the Amsterdam housing purchase effort is 8600 / 2600 = 1.91
But the article calculates averages at a NUTS-3 region level. It would be region NL32B (Greater Amsterdam) where the ratio is 1.1. That explains the difference.
As for the mortage:
8600*50 = 430k.
As you say, this does not fit repayment in 30 years for a single payer receiving 4500 gross.
It is borderline doable in 40 years with 3% interest rate.
So reality in an area with this price is different from the reality of the surroundings. This gets averaged at NUTS-# level. But hey, Eurostat averages it at a country level. So this is progress, I guess.
It was a bit of a long read and started losing focus towards the end and goes around the same concept in different words. It is not clear to me if wages are adjusted every year (e.g. 2-4% to adjust for inflation) during the mock example calculations of repaying a 50m2 apartment. The odd thing about most mortgages is that they lock in a price of today for 5-30 years, but typically your wage does increase, hence the years to pay back the mortgage might technically be lower than calculated. Even if the current analysis does not cover this, I actually thought the years to pay back the mock loan are not that bad in most of these places. Sure 50m2 is small, but it uses only a single income and does not include any non standard income. It would be important to get net salaries in these regions, but it will make it an almost impossible task.
> I actually thought the years to pay back the mock loan are not that bad in most of these places.
But people don't live in most places - most people leave in the worst places, when it comes to purchasing houses.
The number of years calculated per NUTS-3 region does not include the years one needs to save for the 10% deposit plus taxes plus safety cushion. It is written in the article.
I should have clarified in most of the high density areas except Paris. The annual income adjustment question relates to the years to payback the loan, which does not affect the 10% upfront deposit. The way you calculate it now I think is using 45% of net salary (70% of gross) to repay the loan, but is this based on a static current wage applied across the entire annuity of the loan? As of right now, I think this section does not help the case much for some, some believe paying back a mortgage over 30 years is expected, and you get equity, currently only Paris goes above 30 years to repay the mock 50m2 appartment in the initial analysis, perhaps indicating you need more granular data for the ultra dense regions or a more sophisticated way of calculating this that might be closer to reality in each of these unique dense areas.
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.
"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.
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".
These were rental-heavy, 1/2 bedroom rich, ultra gentrified high cost locations. As the offices grew and the "young people" started getting married and buying property, they would have to move far away.
Some surveys are showing younger generations being more concerned with cost. But I wonder if location preference would change if given other options. For example, if the job market was better in smaller cities, would they want to go there instead? For example, if you had smaller cities that were similar to "college towns", I would imagine many younger people wanting to live there. Even as they get older, if they move to the suburbs, the commute wouldn't be as bad, etc.
We see some of that effect with places like State College PA with it's growth, decent job market, a couple hours from a larger city (Pittsburgh).
It's cheaper and easier for the companies to decentralize the jobs overseas than in the US.
Yep, that's the whole demise of the rust belt - the manufacturing was off-shored.
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.
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 possessing already 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 only contact Germans, another close by aimed to 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
Young Italians courteously emigrate for work, to leave space for rich Germans and Americans... but increasingly there are no young people in Italy anymore, or in many other EU countries. Hopefully the growth of real estate market is worth it.
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.
> Statistics do not always match our personal experience.
They also often don’t match reality either.
> 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.
- The elderly don't have a problem - The seniors don't have a problem - The millennials that bought in 2021 or before don't have a problem, in fact they made 200-300k tax free within 5 years - The youths that still live with their parents don't have a problem - The youths that still live their parents because they can't afford to move out don't have a problem making their mortgage because they don't have one.
It's the wrong statistic! Either you earn enough or bought early enough to afford the house and the mortgage is not a financial burden, or you're not getting the mortgage.
Heck, even in my life my 2700 euro mortgage (of a very regular house) isn't a financial burden. My partner and i just about make ends meet. But we can't divorce and we can't get cancer. If that happens then yes, it's back to our parents with a child at 38-years-old.
This article is illuminating in that it demonstrates something many of us may have been thinking for a long time; one of the big drivers has been job concentration. I guess the life-hack takeaway is to find a great job not near an urban center? Remote work from the sticks and you're rich!
> 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 other €1,100, the part that actually hurts, is invisible.
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.
> 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.
Not sure what is confusing you.
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.
Don’t forget property tax and insurance.
yeah most countries have version of that: service charge (and ground rent) in the UK. Not usually supposed to be very expensive, but service charge can be predatory: in London it can be in the thousands of £ for no apparent reasons. There's all sorts of messed-up incentives driving up this service charge, too:
It's incredibly fucked up, I don't understand how it's legal. Add onto that building insurance shenanigans and you get service charges of £3k or £4k for a one-bed flat (I've seen up to £8k). Which makes the flat entirely unsellable of course, so the flat owners are stuck in sometimes _very_ desperate situations.
Which llm was this generated with?
Land Value Tax solves this
The way to make housing more affordable is to make it more expensive?
Yes, the way to make housing more affordable is to suppress raw land costs and to increase the margins on converting land into places for people to live and work.
Care to explain how?
LVT suppresses land prices and increases margins for people who convert land into places for people to live and work.
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
What if you are as effective?
Well then you need to bring down the salary in the major metro which exasperates the cost of living crisis there and/or causes flight of people out to the cheaper places causing the people previously in them to report a cost of living crisis
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.
Hmmm how does the rate of new home/apartment builds look?
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
They're not full, people just aren't willing to increase density so the only option is an ever larger sprawl of houses rather than apartment blocks.
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.
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.
It seems like beliefs in overly privatized processes is standing in thexway - why not just make a department that builds or contracts to build the social housing
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.
It seems like you haven't read the article at all.
> This is what happens when you open your country to be bought by foreign "investors", as it happened with Portugal and Americans.
The following expat groups buy the MOST property in Portugal, according to the country's housing transaction stats:
1. Brazil (9,808 homes purchased)
2. Angola (4,145)
3. France (3,765)
Brazilians accounted for almost 1/4 of purchases by foreign-buyers.
If we focus on just luxury property demand in Q4 2025, it is: UK, USA, Germany, France, Spain...
Just for the record.