Indicator 11.3 Housing cost overload

Text from the Indicator Report 2022 

The indicator expresses housing costs relative to disposable household income. If a household is receiving housing benefits or comparable social benefits, such as social-security payments for accommodation and heating, these are also included in the calculations. These social benefits are not added to the income amount but are deducted from the housing costs, so that the burden of housing expenses on households that rely on housing-related social benefits is reduced or almost nullified.

The purchase of an owner-occupied property is not included in the expenditure on housing. Other spending on measures to enhance the value of a property should not be taken into account either. However, it is not always possible to clearly differentiate between these and value-maintaining expenditures that are considered as housing expenditure. Therefore, some simplifying assumptions must be made. Moreover, the indicator also does not take into account any additional expenditure associated with the place of residence. For instance, expenditure on travelling from the place of residence to the workplace is not taken into account, although it is possible that the threshold of 40 % is not reached only due to the fact that the place of residence is far away from work.

By defining the threshold value as “40 % of disposable household income”, the indicator provides no information about average housing costs. If clusters emerge close to this threshold, they can cause major changes in the indicator over time even if there is only a small change in the ratio of income and housing expenditure.

The initial data for the indicator originate from the Europe-wide harmonised statistics on income and living conditions (EU-SILC). In survey year 2020, the data was integrated with extensive methodological changes as a subsample into the microcensus due to increasing requirements on data with respect to actuality and provision of more detailed regional results in survey year 2020. Thus, the results from 2020 on are not comparable with previous years.

Overall, the indicator developed in the direction of the target value at 13 % until 2019: after an initial growth, the indicator declined from 14.5 % in 2010 to 13.9 % in 2019. As of 2020 the values are significantly below the level of previous years. However, the comparison with results before 2020 is due to the already mentioned extensive methodological changes in data collection and processing unfeasible.

With regard to the actual housing situation and disposable income, the indicator provides only a limited amount of meaningful information. After all, the calculation method means that households with high incomes and high expenditure on housing also appear to be overburdened. Meanwhile, the data show that it is people at risk of poverty – that is, those with less than 60 % of the median equivalised income for the population – who are particularly affected by excessive housing costs. Some 42.2 % of people at risk of poverty were overburdened by housing costs in 2010, rising to 48.3 % by 2019. In total, the values are on a high level. In contrast, excessive housing costs affected a markedly smaller proportion of people considered not at risk of poverty. The 2019 figure of 8.0 % was lower than the 9.4 % recorded in 2010. Both groups develop in the same direction as the overall trend of the time series.

The synoptic table provides information about the evaluation of the indicator in previous years. It shows if the weather symbol assigned to an indicator was rather stable or volatile in the past years. (Evaluation of the Indicator Report 2022 )

Indicator	11.3 Housing cost overload
Target	Reduce the proportion of people who are overburdened to 13 % by 2030
Year	2018	2019	2020	2021
Evaluation			No assess­ment possible