3. Housing
Housing provides shelter, safety, privacy and personal space. The area where people live also determines their access to many different services. Since 2010, there have been some improvements in OECD average housing conditions. Both the extent of overcrowding and the share of poor households lacking basic sanitation have fallen, though large differences across countries persist. The share of households living in overcrowded conditions in 2017 was 30% or higher in Mexico, Latvia and Poland, but 2% or less in Ireland and Japan. The share of poor households lacking access to basic sanitation in OECD countries ranges from over 25% to almost zero. OECD households spend, on average, around 21% of their disposable income on housing costs, but nearly 1 in 5 lower-income households spend more than 40%. Since 2010, the share of households with high-speed internet access has risen markedly, from 63% to 85%.
Note: The snapshot depicts data for 2018, or the latest available year, for each indicator. The colour of the circle indicates the direction of change, relative to 2010, or the closest available year: improvement is shown in blue, deterioration in orange, and no clear or consistent change in grey, and insufficient time series to determine trends in white. For each indicator, the OECD country with the lowest (on the left) and highest (on the right) well-being level are labelled, along with the OECD average. For full details of the methodology, see the Reader’s Guide.
Source: OECD (2019), OECD Affordable Housing Database, http://oecd.org/social/affordable-housing-database; OECD National Accounts (database), http://dx.doi.org/10.1787/na-data-en and OECD ICT Access and Usage by Households and Individuals (database), http://stats.oecd.org/Index.aspx?DataSetCode=ICT_HH2.
People need sufficient space in their homes for privacy and health, and to fulfil all the functions that a home should provide, such as space to study, spend time with family or entertain (OECD, 2011[1]). In 2017, 11.6% of OECD households were living in overcrowded conditions, on average (Figure 3.2) – based on a definition that takes into account the different needs of different household members (see Box 3.1). Overcrowding rates exceed 30% in Mexico, Latvia and Poland, falling to 2% or less in Ireland and Japan. Between 2010 and 2017, overcrowding rates fell by 1 percentage point or more in around one-third of OECD countries, and by 2.6 percentage points for the OECD average. The most significant falls occurred in Slovenia (-19.8 percentage points), Lithuania (-19.1) and Latvia (-14.2). By contrast, overcrowding increased by one percentage point or more in Italy (3.4 percentage points), the United Kingdom (2.6), the Netherlands (2.2) and Austria (2.0).
Note: A house is considered overcrowded if less than one room is available for each couple in the household; for each single person aged 18 or more; for each pair of people of the same gender between 12 and 17; for each single person between 12 and 17 not included in the previous category; and for each pair of children under age 12 (Eurostat, 2019[2]). The latest available year is 2016 for Iceland, Japan, Mexico, Switzerland, the United Kingdom and the United States, 2014 for Germany and 2013 for Chile. The earliest available year is 2011 for Chile and Estonia. The OECD average excludes Australia, Canada, Colombia, Israel, New Zealand and Turkey, due to a lack of data.
Source: OECD Affordable Housing Database, http://oecd.org/social/affordable-housing-database.
When a high share of disposable income is spent on housing, this reduces what households can afford to consume and save to support other aspects of their well-being. In 2018, households in 34 OECD countries had, on average, 79.2% of their disposable income available after housing costs (Figure 3.3). This falls below 76% in New Zealand, the United Kingdom and the Czech Republic, but is above 82% in Korea, Estonia and Hungary. Since 2010 there has been little movement in the OECD average, but this masks divergent country trends. For example, housing affordability fell in Portugal (-2.7 percentage points) and Finland (-2.3), but improved in Hungary (up 3.8 percentage points) and the Slovak Republic (2.3).
Note: The latest available year is 2018 for Denmark and Norway, 2016 for Costa Rica and Switzerland, 2015 for New Zealand, the Russian Federation and Turkey and 2014 for South Africa. The earliest available year is 2013 for Chile, 2012 for Costa Rica, 2011 for the Russian Federation and 2010 for South Africa. The OECD average excludes Colombia, Iceland and Israel, due to a lack of data.
Source: OECD calculations based on OECD National Accounts Statistics (database): "5. Final consumption expenditure of households", http://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE5 and "14A. Non-financial accounts by sectors", http://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE14A.
Low-income households are particularly vulnerable when a high share of their income is devoted to housing costs, since this limits spending on other basic essentials, such as food, health care and education. The measure of housing cost overburden shown below focuses on the share of households in the bottom 40% of the income distribution who spend more than 40% of their disposable income on housing (i.e. rent and mortgage costs). In the average OECD country, 18.2% of lower-income households were overburdened by housing costs in 2017 (Figure 3.4). Greece, Chile, Spain and Luxembourg had the highest overburden rates (over 29%), while rates were lowest in Korea, Latvia, the Slovak Republic and Switzerland (below 9%). Between 2010 and 2017, the OECD average overburden rate was broadly stable. However, changes varied across countries: the largest increase in overburden rates occurred in Chile (17.0 percentage points), Hungary (15.3), Luxembourg (12.7) and Greece (10.5), whereas Lithuania, the United Kingdom and Ireland experienced the largest falls (of more than 5 percentage points).
Note: The latest available year is 2016 for Canada, Iceland, Japan, Switzerland and the United States, 2015 for the Slovak Republic, 2014 for Mexico and 2012 for Korea. The earliest available year is 2016 for the Czech Republic, 2015 for France, 2012 for Belgium, Ireland, Sweden and Switzerland, and no data for Korea. The OECD average excludes Colombia, Israel, New Zealand and Turkey, due to a lack of data.
Source: OECD Affordable Housing Database, http://oecd.org/social/affordable-housing-database.
A lack of basic sanitary facilities, such as an indoor flushing toilet, is a clear sign of poor quality of housing and poses a high risk to health (Eurofound, 2016[3]). Since the majority (95.6%) of households in OECD countries have an indoor flushing toilet for their sole use (OECD, 2019[4]), the indicator shown below focuses on poorer households – defined as those having an income below 50% of the median equivalised disposable household income of their country. In 2017, fewer than 3% of poor households lacked basic sanitation in around two-thirds of OECD countries (Figure 3.5). However, in Mexico, Lithuania and Latvia, over 25% of poor households lived without indoor flushing toilets. By contrast, nearly all poor households in Germany, Iceland, Norway, Sweden, Switzerland, the United Kingdom and the United States had such facilities in their dwelling.
Between 2010 and 2017, access to basic facilities for poor households improved in most OECD countries. The OECD average share of poor households lacking an indoor flushing toilet fell from 8.8% in 2010 to 6.8% in 2017. The greatest improvements occurred in Estonia (a fall of 12.5 percentage points), Latvia (-11.4), Hungary (-11.3) and Korea (-8.0). However, in Mexico and Belgium, the share of poor households lacking an indoor flushing toilet for their sole use increased by 1.5 percentage points or more.
Note: The latest available year is 2016 for Iceland, Mexico, Switzerland and the United States. The earliest available year is 2011 for Chile. The OECD average excludes Australia, Canada, Colombia, Israel, Japan, New Zealand and Turkey, due to a lack of data.
Source: OECD Affordable Housing Database, http://oecd.org/social/affordable-housing-database.
Internet access in the home can support social connections, provide access to job opportunities and to both public and private goods and services, and support the development of human capital among household members. In 2018, more than 80% of households in 29 OECD countries had access to broadband internet services, on average (Figure 3.6). Overall, the range was from fewer than 60% in Mexico, to more than 95% in Korea, the Netherlands and Iceland. Between 2010 and 2018, almost all OECD countries experienced a large increase in internet access. The OECD average rose by more than 20 percentage points, up from 63.1% in 2010 to 85.2% in 2018. The largest gains took place in Turkey (49 percentage points) and Greece (35). By contrast, Korea and Sweden started from a relatively high base in 2010, and as a consequence experienced only small increases (2.6 and 7.3 percentage points, respectively).
Note: The latest available year is 2017 for Chile, Switzerland and the United States, 2013 for Canada, 2012 for Australia and New Zealand, and 2011 for Japan. The earliest available year is 2012 for Chile, 2011 for the United Kingdom, and 2009 for Canada and New Zealand. The OECD average excludes Colombia and Israel, due to a lack of data; Australia, Japan and New Zealand, due to a difference in methodology and inconsistencies compared to other countries (marked in white on the figure); and Luxembourg, Switzerland and the United States, due to a break in the series.
Source: OECD ICT Access and Usage by Households and Individuals (database), http://stats.oecd.org/Index.aspx?DataSetCode=ICT_HH2.
Urban households have greater access to high-speed internet than those in rural areas
Several of the measures explored in this chapter, such as housing cost overburden and poor households without access to basic sanitary facilities, are deprivation measures. Since they are measured at the household level, it is challenging to calculate differences in deprivation rates between population groups (such as men and women, the young and old, or people of different education levels). Where data have sufficient spatial resolution, however, regional differences in housing conditions can be assessed.
The differences in high-speed internet access between urban and rural areas are large in most OECD countries (Figure 3.7). In Greece, Portugal, the Slovak Republic, Spain, Lithuania, Hungary and Ireland, the gap in high-speed internet access between large urban areas and rural areas exceeds 11 percentage points. By contrast, the smallest differences (below 1 percentage point) are in Iceland, the Netherlands and the United Kingdom. A similar pattern exists when comparing small urban areas and rural locations – though these gaps tend to be less pronounced than those for large urban areas.
Note: See Box 3.1 for the definitions of rural, small urban and large urban areas. Data refer to 2017 for Switzerland and the United States.
Source: OECD ICT Access and Usage by Households and Individuals (database), http://stats.oecd.org/Index.aspx?DataSetCode=ICT_HH2.
Housing provides shelter, safety, privacy and personal space. The area where people live also determines their access to many different services. An ideal set of measures for housing conditions would provide information on the quality of housing (e.g. living space, the presence of damp, mould, leaks, etc., sanitary conditions, and access to electricity and clean water), on aspects of housing affordability, and on the amenities and characteristics of neighbourhoods (e.g. access to electricity and clean water, exposure to noise, access to services such as internet access, transport, medical centres, and schools). The indicators considered in this chapter (Table 3.1) capture some but not all of these elements.
The overcrowding rate adopts the EU-agreed definition (Eurostat, 2019[2]), which takes into account different needs for living space according to the age and gender composition of the household. A household is considered as living in overcrowded conditions if less than one room is available in each household: for each couple in the household; for each single person aged 18 or more; for each pair of people of the same gender between 12 and 17; for each single person between 12 and 17 not included in the previous category; and for each pair of children under age 12 (Eurostat, 2019[2]). Data are sourced from the OECD Affordable Housing Database, which uses household survey data.
Housing affordability refers to the share of household gross adjusted disposable income that is available to the household after deducting housing costs. Housing costs include rent (including imputed rentals for housing held by owner-occupiers) and maintenance (expenditure on the repair of the dwelling, including miscellaneous services, water supply, electricity, gas and other fuels, as well as expenditure on furniture, furnishings, household equipment and goods and services for routine home maintenance). Data are sourced from the OECD National Accounts database, and refer to both households and non-profit institutions serving households.
Housing cost overburden refers to the share of households in the bottom 40% of the income distribution devoting more than 40% of their disposable income to housing costs, where the 40% threshold is based on the methodology used by Eurostat for EU member countries (Eurostat, 2019[5]). Housing costs include actual rents and mortgage costs (both principal repayment and mortgage interest); in contrast to the housing affordability measure sourced from National Accounts, no imputed rentals for owner-occupied homes are included. No data on mortgage principal repayments are available for Denmark. For Chile, Mexico, Korea and the United States, gross income instead of disposable income is used. Data are drawn from the OECD Affordable Housing Database, which is sourced from household survey data.
Poor households lacking access to basic sanitary facilities refers to the share of households with equivalised disposable household income below 50% of the national median without an indoor flushing toilet for the sole use of the household. Flushing toilets exclude toilets outside the dwelling, but include flushing toilets in a room where there is also a shower unit or a bath. For Chile, Mexico, Korea and the United States, gross income instead of disposable income is used. Data for Korea refer to a flushing toilet regardless of the type of toilet (Asian or European style). Data are drawn from the OECD Affordable Housing Database, which is sourced from household survey data.
Households with high-speed internet access at home refers to the share of households with broadband internet access at home. Broadband internet is defined as subscriptions with a download speed of at least 256 Kbit/s. The definition of rural and urban areas is provided below. Data are sourced from the OECD database on ICT Access and Usage by Households and Individuals.
Correlations among Housing indicators
Across OECD countries, there are only three highly significant correlations among the housing indicators used in this chapter (Table 3.2), which suggests that the indicators capture different facets of the dimension. In countries with a higher overcrowding rate, there also are more poor households lacking access to basic sanitation, and fewer households with high-speed internet access. Housing affordability and housing cost overburden are not significantly correlated, suggesting that each contributes different information about housing costs.
Statistical agenda ahead
Further harmonisation is needed for calculating the housing overcrowding rate: cross-country differences exist in how rooms are defined, in particular the treatment of kitchens, and in how minimum space restrictions are applied. Kitchens are counted as rooms in Chile, Japan, Korea, Mexico and the United States; by contrast, in all European countries rooms exclude kitchens used exclusively for cooking (while including “kitchen-cum-dining rooms”). European countries exclude spaces of less than 4 square meters; Germany excludes spaces of less than 6 square meters; the United States specifies that rooms “must extend out at least 6 inches and go from floor to ceiling”. These two features imply that overcrowding rates may be biased upwards in European sources, relative to those from Chile, Japan, Korea, Mexico and the United States (since fewer household spaces are counted as rooms).
For the calculation of housing cost overburden, no data on mortgage repayments are currently available for Denmark and Iceland. No information on reduced rent is available for Australia, Canada, Chile, Mexico, New Zealand, the United States, Denmark and the Netherlands. Thus, further methodological harmonisation is needed.
Several aspects of housing quality, such as the provision of living space and the presence of damp, mould and leaks, are not captured in a consistent way across international data sources. Internationally harmonised data on access to services and amenities (such as transport, medical centres, schools, etc.) are being developed, but are not yet available on an OECD-wide basis. Internationally comparable data on homelessness (a measure of extreme housing deprivation) and people’s perceptions of their housing conditions are also lacking.
Capturing housing inequalities among different population groups (such as by sex, age, or education) is challenging, because these data are typically reported at the household level. One possibility would be to consider differences between groups according to the status of the head of the household, as done for the Income and Wealth dimension (see Chapter 2). Regional inequalities are particularly important in the housing domain, not least given the important role that location plays in determining access to services.
References
[3] Eurofound (2016), “Inadequate housing in Europe: Costs and consequences”, http://dx.doi.org/10.2806/810142.
[5] Eurostat (2019), Statistics Explained: Housing cost overburden rate, https://ec.europa.eu/eurostat/statistics-explained/index.php/Glossary:Housing_cost_overburden_rate (accessed on 23 December 2019).
[2] Eurostat (2019), Statistics Explained: Overcrowding rate, https://ec.europa.eu/eurostat/statistics-explained/index.php/Glossary:Overcrowding_rate (accessed on 23 December 2019).
[4] OECD (2019), Better Life Index, http://www.oecdbetterlifeindex.org/topics/housing/.
[1] OECD (2011), How’s Life?: Measuring Well-being, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264121164-en.