Over the past two decades, the portion of household expenditure dedicated to housing, water, electricity, gas, and other fuels has seen a marked increase across Europe. As the cost of living continues to rise, these essential categories have taken a larger share of household budgets, causing concern among many Europeans.
Housing and Utility Costs on the Rise
In 2022, expenditures on housing, water, electricity, gas, and other fuels made up 24.1% of total household spending in the EU, according to Eurostat. This category, which includes rent, utilities, and maintenance, has consistently ranked as the largest share of household consumption, followed closely by food and non-alcoholic beverages at 13.6%, and transport at 12.5%. While these rankings have remained stable, the relative shares have shifted significantly over time.
Understanding the Components of Housing Expenditure
Household spending on “housing, water, electricity, gas” encompasses several key elements, including actual and imputed rentals for housing, maintenance, repairs, water supply, and utility costs. Imputed rental represents the value of housing services consumed by owner-occupiers, reflecting the amount they would pay if they were renting their own homes. This expenditure highlights the growing financial burden that housing and utilities place on European households.
The Rising Financial Pressure on European Households
Comparing figures from 2002 to 2022, the share of household expenditure on housing and utilities has increased from 21.1% to 24.1%. This 3 percentage point rise underscores the mounting costs associated with essential living expenses. For example, if a household spent €1,000 in 2002, €211 would have gone towards housing; by 2022, this figure would have risen to €241.
The economic impact is even more significant when considering other categories. Health expenditures, for instance, have increased by 22% over the same period, compared to a 14% rise in housing costs. However, due to the larger share of housing expenses, the overall financial strain on households has intensified.
A Closer Look at Regional Differences
The increase in housing and utility expenses is not uniform across Europe. Ireland experienced the most substantial rise between 2002 and 2022, with a staggering 7.1 percentage point increase. Spain and Italy also saw significant increases, at 6.3 pp and 5.4 pp, respectively. In contrast, several Eastern European countries, Sweden, and the UK saw a decrease in the share of expenditure on housing, with Romania experiencing the most considerable drop at 4.1 pp.
Impact of the Covid-19 Pandemic
The Covid-19 pandemic further exacerbated the financial burden of housing and utilities. During this period, the share of household spending on these essential services surged, reaching record highs in many countries. Although this trend began to reverse in 2022 as the pandemic eased, the overall increase in housing-related costs over the past two decades remains significant.
European Countries Facing the Highest Housing Costs
In 2022, Slovakia led the EU with over 30% of household expenditure dedicated to housing, water, electricity, gas, and other fuels. Finland and Denmark followed closely, with 29.6% and 29.1%, respectively. These figures indicate that Northern and Central European countries face considerable financial pressures related to housing and utilities, likely due to higher energy costs and more expensive housing markets.
Conversely, countries in Southern and Eastern Europe, such as Montenegro, Turkey, and Albania, have much lower shares, with housing expenses accounting for just 11.6% to 12.5% of household budgets.
The Disproportionate Impact on Lower-Income Households
The growing cost of housing disproportionately affects lower-income households. According to a recent OECD report on affordable housing, nearly half of low-income private tenants in the UK spent more than 40% of their income on rent in 2022, with similarly high figures in France and Italy. These alarming statistics highlight the urgent need for addressing housing affordability in Europe’s leading economies.
Conclusion: The Increasing Financial Strain of Housing and Utilities
The rising cost of housing, water, electricity, gas, and other fuels has become a significant financial burden for European households over the past 20 years. As these expenses continue to consume a larger share of household budgets, the economic pressures on families are mounting, particularly in regions with higher housing and utility costs. Addressing these challenges will be crucial for ensuring economic stability and improving the quality of life for citizens across Europe.
Keywords: Household expenditure, Housing and utilities, Rising costs
