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Renters Under Pressure Globally

Attempting to make comparisons between the structures of countries’ housing markets is a difficult task. Numerous elements must be considered, such as geography, government policies, and demographics, while analysis can be further complicated by an overall shortage of comparable data throughout various countries. However, a 2016 report by Harvard University’s Joint Center for Housing Studies (HJCHS) that analyzed the affordability of rent throughout the U.S., Canada, and 10 economically advanced European countries shows that there is one thing that almost all countries have in common: renters are under significant pressure to spend a substantial amount of their income on housing costs (rent payments, utilities, etc.).

HJCHS found that the median renter in Spain spent 32.3% of their income on housing costs, placing it at the top of the list. In comparison, the median renter in the U.S. spent 31.1% of their income on housing costs, followed closely by countries such as the United Kingdom and Belgium, where the median renter spent 30.1% and 29.5% of their income on housing costs respectively.

Source: Joint Center for Housing Studies of Harvard University

However, the picture is not quite the same when it comes to renter households spending a considerable amount of their income on housing costs. 28.5% of renter households in the U.S. spent more than half of their income on housing costs, placing it at the top of the list. This is far greater than all countries but Spain, where 27.5% of renter households spent more than half of their income on housing costs.

Source: Joint Center for Housing Studies of Harvard University

While there are several factors that can help explain why renters in the U.S. face such a high burden, HJCHS found the country’s lower subsidy availability to be a chief cause. Approximately 6% of renter households in the U.S. received housing allowances in 2015, which was significantly lower than what renter households in countries such as the Netherlands (38.0%) and the United Kingdom (46.4%) received.

Source: Joint Center for Housing Studies of Harvard University

Another main reason why renter households in the U.S. experience such extraordinary housing costs is the high concentration of low-income renters. HJCHS found that, “while just over 33 percent of all U.S. households were renters, nearly 55% of those in the lowest income quintile rented.” Furthermore, “the median renter in the lowest income quintile paid 74.8% of income for housing”, while only two other countries (Spain and Italy) had median renters that paid more than 50% of their income on housing.

Source: Joint Center for Housing Studies of Harvard University

In summation, despite the fact that great differences exist between housing markets in various countries, it has become increasingly evident that rental households overall have been facing a growing housing cost burden.