Last year Economist Gary Bradshaw developed the index, rental prices in major US cities only. This year the Carry Index was extended to Europe, capturing the prevailing situation with rents.
Our European ranking includes data for 35 cities from London to Ankara. Using a popular guideline that states no more than 30% of a person's pre-tax income should be spent on rent, we calculated the salary needed to comfortably afford an average one-bedroom apartment in each city, which we call the “recommended salary renter.” ’ (see Figure 1).
Which countries are at the top?
Above $95,000 (all incomes are given in dollars, for ease of comparison), London and Geneva demand the highest annual incomes for single renters. Less than 1% of homes in both cities are unoccupied: tight markets create high prices. At the bottom of our ranking is Ankara, the capital of Turkey, where an income of less than $18,000 is enough to live alone.
But incomes vary significantly across the continent. We've created a “Bradshaw Score” to find out where the median income earner can afford a one-bedroom apartment. Our renters' suggested salaries are compared to median salaries in each city, using data from the ERI Economic Research Institute, Salary Compiler. The higher the rating, the more affordable it is to rent to own.
The table shows where the rent is highest
Budapest is “hot”.
By this measure, Budapest is the most expensive city to rent. For most of 2023, Hungary had the highest inflation rate of any EU country. Rental costs in the capital will increase by 19% from 2022. The Portuguese capital also has the largest rent-wage gaps in our index. Rents in Lisbon have soared following an influx of “digital nomads”, tech workers lured by sunny weather and cheap visas. (The ERI data is based on commuter counts, not where you work, not where you live.) The median salary of $31,000 is now half the $58,000 needed to buy a bed. Renting alone in both cities is almost as difficult as it is in New York, relative to average wages.
Some of the cheapest cities are in Germany. Bonn's median salary of $53,000 is higher than the $36,000 needed for rent alone, giving it a high Bradshaw score on our index. Berlin, the German capital, has been home to massive protests against rent hikes in recent years, and Karlsruhe in the southwest has a score above 1.
Carey Index, hoping to get closer to Europe's fashion capital Paris, may compromise with Lyon, one of France's culinary hotspots. A median salary of $45,000 is more than the $34,000 required for a one-bedroom.
Source: ot.gr