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How much monthly salary does a 100 m² house cost in the world? How do European countries compare?

2024-10-03 09:30:18Biznes SHKRUAR NGA REDAKSIA VOX

How much monthly salary does a 100 m² house cost in the world? How do

The most affordable place in Europe to buy a home, relative to median income, is Denmark, according to a new report from BestBrokers.com. The average price of a 100 square meter property is the equivalent of 114 net salaries in Denmark, ranking the northern country as the most affordable place in Europe to buy a home, with data from the IMF, property price specialist Numbeo and TradingEconomics. BestBrokers revealed.

Meanwhile, Denmark is ranked as the most expensive country in the EU in 2023 (prices for goods and services were 43% above the EU average, according to Eurostat) with average annual income ranked as the seventh highest in Europe. "As prices and incomes vary significantly from one country to another, the BestBrokers team decided to examine the property market through how many months' salary it takes to buy a house in different European countries," their report states.

The affordability rankings are based on data that examines housing prices, median net monthly income, inflation and "real" mortgage interest rates, which are mortgage rates adjusted for inflation, in 62 countries around the world.

According to this report, Ireland and Sweden are the second and third most affordable countries in Europe, with respectively 123 and 129 net salaries, enough to buy a house of 100 square meters. This is equivalent to approximately 10 years of annual salary. However, there is a slight catch and that is that the count is purely theoretical. This means that expenses for food, accommodation, childcare or anything else a person might need or want do not count.

The latest rankings in Europe show the Czech Republic and Slovakia. In the latter, the average house of 100 square meters costs 297 times more than the average salary, which could be earned over almost 25 years. If someone can save half of their net pay, they will still be looking at 50 years spent saving hard to own a single family home.

Real mortgage interest rates in Europe for the third quarter of 2024

One of the essential data to analyze housing prices and affordability was the number of real mortgages in each country. The study used data on mortgage rates and projected inflation rates for the third quarter of 2024 to learn about "real" mortgage rates for the third quarter of 2024 in various countries.

"The real mortgage interest rate reflects the true cost of funds for the borrower and the true yield for the lender," the report said. According to the report, the highest real mortgage interest rate is in Russia, where a state-backed mortgage program ended in July 2024. According to the report, the nominal mortgage rate is expected to be around 20.3% for the third quarter of 2024. They adjusted it for projected inflation of 8%, resulting in a forecast for the real mortgage rate to fall to 12.3% in the July-September 2024 period.

Based on this calculation, other European countries with high real mortgage rates include Latvia at 6.65% and Poland at 5.1%. In Germany, the rate is 1.85%, in the UK, it is 1.77%. In the next largest European economies, the rate is around 1%, such as in France (1.13%), Italy (0.99%) and the Netherlands (0.96%). Negative real mortgage rates in Belgium (-0.52%) and Sweden (-1.21%), for example: “Do not suggest that homebuyers there will eventually pay no interest on their mortgage; on the contrary, it indicates that the real (vs. nominal) cost of borrowing may have fallen," the study says.

How much monthly salary does a 100 square meter house cost around the world?

The most affordable place in the world to buy a home relative to wages is South Africa, where people need 71 times the average salary to own a 100 square meter property. The United States was ranked second in this ranking.

However, property prices vary widely from one state to another. The report found that, in the US, people need 76 average monthly salaries to buy a home. This is equivalent to approximately six years of annual salary. At the bottom of the ranking is Nepal, with 684 salaries needed to buy a house, followed by Turkey, where the number is 631, the equivalent of earnings over 52.5 years.


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