Is this the most affordable country in Europe to buy a home?

The most affordable country in Europe to buy a home, relative to the average income, is Denmark – according to a new report by BestBrokers.com.

The average price of a 100-square metre property is the equivalent of 114 net salaries in Denmark, ranking the Northern country as the most affordable country in Europe to buy a home, data from the IMF, property price specialist Numbeo and TradingEconomics, BestBrokers found.

Meanwhile, Denmark 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 the annual average earnings ranking as the seventh highest in Europe.

“Since prices and income vary significantly from one country to the next, the team at BestBrokers decided to examine the property market through how many months of salary it takes to buy a home in various European countries,” read their report.

The affordability ranking is based on data examining the house prices, average net monthly income, inflation and “real” mortgage interest rates, which is the mortgage rates adjusted with inflation, across 62 countries in the world.

Where in Europe would it take the longest to save up for a house?

According to this report, Ireland and Sweden are the second and third most affordable countries in Europe, with 123 and 129 net wages respectively, being sufficient to buy a 100-sq-metre home. That is equivalent to roughly 10 years of annual salaries.

There is a slight catch, however, and that is that the count is purely theoretical. That means spending on food, accommodation, childcare or anything else a person might need or want is not counted.

The bottom rankings in Europe show the Czech Republic and Slovakia. In the latter, the average 100-square-metre home costs 297 times the average salary, which could be earned during almost 25 years. If someone can save half of their net wage, they will still be looking at 50 years spent vigorously saving to own a house for a family.

Real mortgage interest rates in Europe for 2024’s third quarter

One of the crucial data to analyse house prices and affordability was to count the real mortgages in each country. The study used data about mortgage rates and projected inflation rates for the third quarter of 2024 to find out about the “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,” reads the report.

According to the report, the highest real mortgage interest rate is in Russia, where a state-backed mortgage programme 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 that with a projected inflation of 8%, which resulted in a forecast for the real mortgage rate to sit at 12.3% in the period of July-September 2024.

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 instance: “Do not suggest that homebuyers there would eventually pay no interest on their mortgage; rather, it shows that the true (versus nominal) cost of borrowing might have fallen,” read the study.

How many monthly salaries does a 100-sq-metre home cost around the world?

The most affordable country in the world to buy a house relative to wages is South Africa, where people need 71 times the average wages to own a 100-square metre property.

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The United States came second in this ranking. However, property prices vary a lot from one state to another. The report found that, in the US, people need 76 average monthly wages to buy a home. This is equivalent to roughly six years of annual salaries.

At the bottom of the ranking sits Nepal, with 684 salaries necessary to buy a home, closely followed by Turkey, where the number is 631, the equivalent of earnings throughout 52.5 years.

Disclaimer: This information does not constitute financial advice, always do your own research on top to ensure it’s right for your specific circumstances. Also remember, we are a journalistic website and aim to provide the best guides, tips and advice from experts. If you rely on the information on this page, then you do so entirely at your own risk.