Affordable housing is available in Denmark

The most affordable countries to buy a new home are Norway, and Denmark, where citizens need an equivalent of less than five gross annual salaries to buy their own home. Citizens of Norway need to save 4.8 gross annual salaries. The most affordable country to buy a new home is Denmark, where homes cost a mere equivalent of 4.7 gross annual salaries.

Capital cities: Amsterdam the most expensive

A buyer in Amsterdam must save 15.1 average gross annual salaries to afford an average-priced home, 0.7 less than last year. Despite this, Amsterdam remains the least affordable city based on the gross income to price per square meter ratio. In the Netherlands, buyers can get mortgages covering up to 100% of the property's value and benefit from tax advantages like the mortgage interest deduction, which reduces homeownership costs. These factors make it easier for Dutch residents to buy homes, indicating that comparisons based solely on gross income may not fully reflect true affordability.

Prague second, Rome the most affordable

In this ranking, Amsterdam is followed by Prague, and Bratislava. The citizens of Prague must save an equivalent of 13.5 gross annual salaries on average, compared to 14.3 gross annual salaries last year. In addition, those living in Athens have to save an equivalent of 13.3 gross annual salaries (compared to 12.3 in the previous edition).

People in Bratislava, Dublin, Belgrade, Budapest, Ljubljana, Copenhagen, Warsaw, London (inner), and Zagreb would need to accumulate, the equivalent of 8 to 13 gross average annual salaries in order to afford a new apartment.

Oslo comes up as the second most affordable city for an average new dwelling, whilst Rome is once again the most affordable city to purchase a dwelling, as an average dwelling costs approximately 6.9 average gross annual salaries.

Mortgage Markets in Europe

Average household indebtedness is low in Hungary, Romania, Greece, Slovenia, and Croatia, with less than 30% of total outstanding residential loans relative to household disposable income.

In contrast, the states of Central Europe, like the Czech Republic, Austria or Slovakia have managed to keep their private household debt levels between 40% and 60%.

France and Germany – two of the biggest residential markets in Europe – both still have private household debt ratios lower than 80%.

On the other side of the spectrum, Denmark, Norway, and the Netherlands have the highest levels of household debt. While Denmark limits its debt below 170%, Norway and the Netherlands have seen debt climb to near 180%.

When comparing the average mortgage rates, Poland (8.1%), followed by Romania (7.7%), Hungary (7.4%), and Serbia (6.8%) have the highest rates. An average mortgage interest rate above 4.5% has also been observed in the Czech Republic (5.9%), Denmark (5.2%), Bosnia and Hercegovina (4.9%), Norway (4.8%), Italy and the United Kingdom (both 4.7%).

In contrast, the lowest average mortgage rates were observed in Bulgaria (2.5%), Spain – (3.1%), Belgium and Croatia (3.3%), France, Slovenia, and Portugal (3.6%), Israel and Slovakia (3.8%), and in Austria (3.9%).

Different city, different category

Most Expensive Countries and Cities:

• Among the surveyed countries, Israel remains the priciest country in which to purchase a new home in 2023.
• Paris is the most expensive city in Europe at €14,900 per sqm.

Significant Price Increases:

• Marseille experienced the largest annual percentage increase in new dwelling prices between 2022 and 2023 among all cities surveyed.
• Budapest experienced the greatest annual increase in the prices of new dwellings, with a rise of 13.9%.

Affordability:

• Residents of the Czech Republic face the highest multiples of their gross annual salary to purchase new homes.

More information: Deloitte Property Index 2024 | Deloitte Czech Republic

Miroslav Linhart

Partner in Charge | CE RE Leader

mlinhart@deloittece.com

+420 737 235 553

Petr Hána

Director

phana@deloittece.com

+420 246 042 825