Concern over housing costs hits record high in rich countries

2024-09-03 14:55:00, Kosova & Bota CNA

Rising mortgage costs and higher rents have combined with a chronic shortage of buildings

Dissatisfaction over housing costs has peaked across rich countries, rising above other concerns such as health care and education.

Half of respondents in OECD (Organization for Economic Co-operation and Development) countries are dissatisfied with the availability of affordable housing, according to Gallup Analytics figures, a sharp increase since central banks raised interest rates to deal with the worst period of inflation in a generation.

While higher rates have helped lower property prices in some European countries, housing remains more expensive than before the pandemic – even before factoring in higher borrowing costs.

In the US, housing prices have risen despite rising interest rates. Almost 60% of respondents in the world's largest economy said they were dissatisfied with the amount of affordable housing.

Meanwhile, rents have risen, at a time when higher prices for other essentials, such as food and fuel, have reduced incomes.

Researchers partly blame the lack of new home construction for the affordability crisis.

Andrew Wishart, analyst at Capital Economics, said: "Population trends can move much faster than housing supply can change."

Dissatisfaction with housing will play an important role in this year's elections, especially in the US, where voters go to the polls in November.

The median home price is now almost 38% higher than when US President Joe Biden took office in January 2021, according to the Case-Shiller index.

Research by Harvard University showed that the monthly housing payment for a median-priced home with a low-deposit loan, favored by first-time buyers, was now $3,096 – compared to around $2,000 in January 2021.

Meanwhile, many existing homeowners have taken out 30-year mortgages at extremely low rates and overall are paying less in debt service as a percentage of income than at any time since 1980, according to Harvard.

Gallup's data, based on responses from more than 37,000 people in the 37 countries that make up the OECD, shows that dissatisfaction with housing affordability is highest among under-30s and those aged 30 to 49, many of who may be trying to own property.

Some 44% of over-50s were dissatisfied with housing in OECD countries, but the percentage rose to 55% for under-30s and 56% for those aged 30 to 49.

In England, house prices are now eight times the average annual wage, according to official statistics. This is more than double the first report, when the last Labor government took office in 1997. The number of families living in temporary accommodation in England is also at a record high.

About 30% of the population in rich countries were dissatisfied with the health care system, education and public transport. Dissatisfaction with the standard of living increased in 2023, but only slightly, rising from 24 to 25%.

The Gallup World Poll is compiled annually, with the 2023 survey based on responses from 145,702 people in 142 countries and weighted by population. Respondents were asked about a variety of socio-economic and political issues.

Some countries where 2024 data are already available have shown a further rise in housing dissatisfaction this year. In Germany, the share of those dissatisfied with the availability of affordable housing rose to a new high of 46%, up from 42% in 2023 and more than double the levels by 2012. In Spain, the percentage of those dissatisfied with housing rose to 62% in 2024, the highest since the financial crisis. /FT/Retrieved from Monitor