SOCIAL DEMOCRACY

Denmark has the lowest home price-to-income ratio among 35 European countries


By Dr. Tim Sandle
November 6, 2024

Since the 2009 Self-Government Act, only Greenland's currency, justice system, foreign and security affairs fall under Denmark's authority - Copyright PRU/AFP/File Handout

Across many industrial sectors, salaries are struggling keep up with inflation and the increasing prices of real estate across most of Europe makes purchasing property challenging. This is the subject of a new report, comparing the home price-to-income ratio in 35 European countries.

The company that has compiled the report is BestBrokers, who have checked the average prices of real estate from the price comparison website Numbeo as well as research the net salary employees earn on average in 62 countries, including 35 in Europe.

The firm also considered the inflation and applied the projected inflation percentage for the third quarter of the year to the monthly wage. This allowed them to see the current situation income-wise in these countries and estimate the real affordability of homes.

The calculations show that Denmark, one of the most expensive countries in Europe and the world, has the most affordable residential real estate when the average monthly salary is taken into account. A home of 100 square metres in the Scandinavian country costs roughly €441,791.15, which is equivalent to around 114 average real net salaries.

In comparison, the average cost of homes of the same size across Europe is much higher and is the equivalent of 190 salaries.

Ireland ranks second in Europe with 123 monthly salaries needed to purchase a home of this size, followed by Sweden in third place with 129 monthly salaries.

In contrast, the European country with the worst home price-to-income ratio is Slovakia where the price of 100 sq. metres of residential real estate is equivalent to roughly 297 monthly wages. To afford a home of this size, those on the average salary there need to save their entire earnings for 24 years and 9 months. The countries with the highest home sales prices in Europe are Switzerland (€14,185 per sq. m.) and Luxembourg (€8,953 per sq. m.), while the lowest prices are in Moldova (€1,319 per sq. m.) and North Macedonia (€1,420 per sq. m.).

Further with Switzerland, it is the nation with the highest real net salary in Europe at €5,829, followed by Denmark (€3,857). The lowest wages are in Moldova (€566) and North Macedonia (€661).

Top 10 countries where homes cost the most monthly wages in EuropeSlovakia – real net salary of €1,121, €3,332.65 per sq. metre, 100-sq.metre home costs 297 wages
Czechia – real net salary of €1,420, €3,900.52 per sq. metre, 100-sq.metre home costs 274 wages
Slovenia – real net salary of €1,449, €3,786.65 per sq. metre, 100-sq.metre home costs 261 wages
Montenegro – real net salary of €819, €2,100.45 per sq. metre, 100-sq.metre home costs 256 wages
Bosnia and Herzegovina – real net salary of €672, €1,714.73 per sq. metre, 100-sq. metre home costs 255 wages
Luxembourg – real net salary of €3,632, €8,953.05 per sq. metre, 100-sq.metre home costs 246 wages
Switzerland – real net salary of €5,829, €14,185.05 per sq. metre, 100-sq.metre home costs 243 wages
Poland – real net salary of €1,258, €3,051.77 per sq. metre, 100-sq.metre home costs 243 wages
Croatia – real net salary of €1,289, €3,067.34 per sq. metre, 100-sq.metre home costs 238 wages
Portugal – real net salary of €1,226, €2,873.41 per sq. metre, 100-sq.metre home costs 234 wages

Top 10 countries where 100-sq.metre homes cost the fewest average salariesDenmark – real net salary of €3,856.49, €4,417.91 per sq. metre, 100-sq.metre home costs 114 wages
Ireland – real net salary of €3,282.83, €4,036.42 per sq. metre, 100-sq.metre home costs 123 wages
Sweden – real net salary of €3,083.62, €3,989.38 per sq. metre, 100-sq.metre home costs 139 wages
Spain – real net salary of €2,139.88, €2,825.11 per sq. metre, 100-sq.metre home costs 132 wages
Belgium – real net salary of €2,524.55, €3,333.86 per sq. metre, 100-sq.metre home costs 132 wages
Cyprus – real net salary of €1,804.41, €2,508.63 per sq. metre, 100-sq.metre home costs 139 wages
Norway – real net salary of €3,469.20, €4,869.36 per sq. metre, 100-sq.metre home costs 140 wages
Netherlands – real net salary of €3,197.86, €4,944.11 per sq. metre, 100-sq.metre home costs 154 wages
Latvia – real net salary of €1,198.44, €1,903.02 per sq. metre, 100-sq.metre home costs 159 wages
Romania – real net salary of €993.20, €1,715.82 per sq. metre, 100-sq.metre home costs 173 wages

With the data computation, he price to income ratio is the nominal house price index divided by the nominal disposable income per head and can be considered as a measure of affordability.