The access to home ownership has become an increasingly difficult possibility for European households with lower resources. The strong increases in real estate prices are widening the gap between those who are already owners and those who continue to live in rental.
A recent report from the European department of the International Monetary Fund (IMF), published by La Vanguardia, analyzes precisely the possibilities that tenants have of eventually buying a home. Among the economically most vulnerable households, only 2% would have options to become owners, a proportion that has reduced by more than half compared to the levels prior to the financial crisis of 2008.
In the case of households with greater capacity to face a new economic blow, the percentage rises to 5% in the period between 2022 and 2024.
Savings become a barrier
The high price of properties is not the only obstacle. The need to have sufficient savings to face the down payment for a home makes access to ownership even more difficult for families with lower incomes.
Even those households that have some economic backing or can rely on the help of their relatives find it difficult to gather the necessary capital. For the most vulnerable sectors, the purchase of a home is thus increasingly out of their reach.
This situation also has long-term consequences, as being an owner constitutes one of the main ways of accumulating wealth for households.
Tenants with fewer resources spend more than half of their income on housing
While buying becomes more inaccessible, renting also exerts increasing pressure on family economies. Between 2022 and 2024, tenants with lower incomes in major European cities allocated 53% of their disposable income to housing payments, the highest percentage of the analyzed periods.
The difference is considerable between different income levels. In households with higher incomes, the effort allocated to housing ranged between 10% and 18%.
The problem intensifies in cities
The loss of possibilities to access home ownership has been especially pronounced in urban areas, although the phenomenon also extends to rural areas.
The report points to several factors that could explain this difference, among them the changes caused by the pandemic. The increase in demand for larger homes and the expansion of teleworking favored some buyers leaving large cities and seeking alternatives in other areas.
The lack of supply drives up prices
The IMF's diagnosis also notes a difference compared to the housing bubble prior to the Great Recession. The current increase in prices would be mainly related to the insufficient supply of housing.
The shortage of workers in the construction sector and the financial difficulties of development companies are among the factors that are limiting the capacity to increase the number of available homes.
The situation is especially visible in Spain, Greece, Ireland, and Portugal, countries where the construction sector suffered a strong contraction after the financial crisis of 2008. Since then, the average age of workers in this industry has increased by about 4.5 years, surpassing the average of the entire employed population.
The IMF calls for increasing housing construction
To address the housing access crisis, the organization proposes to European governments various measures aimed at increasing supply. Among them are the simplification of processes to obtain licenses, facilitating residential land, and improving access for construction companies to financing.
It also proposes expanding the stocks of social and affordable housing and advancing towards greater integration of the European construction market.