European cities where rent takes the largest share of income are increasingly concentrated in Southern Europe’s most sought-after capitals and major urban centres, with Lisbon standing out at an extraordinary 116 percent of an average salary, according to figures published by the Council of the European Union. Barcelona and Madrid follow at 74 percent, while Milan reaches 72 percent and Rome 65 percent.
The figures offer a stark measure of how difficult it has become to live in some of Europe’s major cities on a typical salary. The Council’s comparison projects the share of salary expected to be spent on rent in 2025 and uses 30 percent of income as the commonly accepted benchmark for an affordable rental burden. A figure above 100 percent means the projected rent is higher than the average salary itself.
Lisbon is the clearest example of the gap between housing costs and local earnings. At 116 percent, the city’s projected rent burden does not simply leave residents with little money after paying the landlord. On the measure used by the Council, the rent exceeds the average salary.
That distinction matters because high rents do not necessarily tell the whole story about affordability. A city can have expensive housing but remain comparatively manageable for residents if salaries are high enough. Conversely, a city with lower nominal rents can be extremely difficult for residents when wages are substantially lower.
The European Central Bank has made a similar distinction at the national level. Across the euro area, rental expenditure is equivalent to around one-third of household monthly income on average, but the picture changes considerably between countries. Ireland has the highest average rent-to-income ratio in the ECB’s comparison, followed by Greece and Finland, while Germany records the lowest. The ECB also notes substantial differences within countries, particularly between urban and rural areas.
The city figures reveal why national averages can conceal the pressure experienced in major urban centres. Housing demand is concentrated where jobs, universities, transport networks and services are concentrated, while the supply of homes often struggles to keep pace.
The European Commission’s recent housing work identifies insufficient housing supply as a structural driver of the affordability problem. Its September 2026 proposal for an Affordable Housing Act says the pressure is particularly severe in cities, metropolitan regions, islands and tourist destinations where demand significantly exceeds available supply. The Commission also points to the effect on young people, low- and middle-income households and essential workers who need to live close to their jobs.
For cities such as Barcelona and Madrid, where the projected share reaches 74 percent, the problem is therefore not simply that apartments are expensive. It is that the relationship between housing costs and earnings has become increasingly difficult to sustain for people who depend on local wages.
The same pattern appears in Italy. Milan’s projected rent burden of 72 percent places it close to the Spanish cities, while Rome stands at 65 percent. These figures put both cities well beyond the 30 percent affordability benchmark used by the Council.
The pressure is not limited to the cities at the top of the ranking. An EU-wide analysis cited by the European Commission found that around 30 percent of the urban population would need to spend more than 30 percent of average income to rent a 25-square-metre apartment. For a 75-square-metre apartment, tenants in most European cities need to devote more than 30 percent of average income to rent, with many facing a burden above 60 percent.
That difference between a small apartment and a family-sized home is important. Affordability statistics can look less severe when they are based on a small dwelling, yet households with children or people who need additional space face a very different calculation. The Commission’s analysis found that only 3 percent of people living in EU cities could rent a 75-square-metre apartment for less than 30 percent of average income, while 26 percent faced a burden above 60 percent.
The pressure is also increasingly tied to where people can afford to live. The Council says rising housing costs can affect labour mobility, access to jobs and education and inequality between regions and social groups. When workers cannot afford to live near employment centres, the housing problem becomes a labour-market problem as well.
This is particularly significant in cities that depend on workers in sectors such as hospitality, healthcare, retail, transport and other essential services. A city can attract investment and visitors while becoming progressively harder for the people who keep it functioning to afford.
Europe’s housing markets also differ considerably, which makes a single explanation difficult. The Council notes that some countries have housing markets dominated by owners, while others have much larger rental sectors or more extensive subsidised housing. Germany, Austria and France, for example, have relatively high shares of renters, while homeownership is much more widespread in several eastern European countries.
Those differences help explain why the same rent level can produce very different experiences from one city to another. They also mean that comparing cities solely by advertised rent can be misleading. The more revealing question is how much of a resident’s income disappears into housing each month.
The broader European picture is already forcing housing higher up the political agenda. EU leaders called for stronger action on affordable housing in 2025, and the European Commission proposed the Affordable Housing Act in September 2026. The proposed framework is intended to help member states and local authorities respond to housing affordability and availability pressures while respecting the fact that housing policy remains largely a national, regional and local responsibility.
The European housing debate is unlikely to be resolved by rent measures alone. The Commission’s proposal stresses the importance of increasing housing supply, while its broader approach also considers planning, investment, construction capacity and the use of existing housing. The challenge is particularly complicated in cities where population growth, tourism, limited land and strong demand compete for the same housing stock.
For residents, however, the calculation remains much simpler. When rent consumes 30 percent of income, housing is a significant monthly expense. At 60 or 70 percent, it can dictate almost every other financial decision. At 116 percent, the arithmetic itself shows that an average salary is no longer sufficient to cover the projected rent.
That is what makes Lisbon’s position so striking, but it is also what makes the wider European figures significant. The housing crisis is no longer simply a question of whether Europe’s most desirable cities are expensive. Increasingly, it is a question of whether the people earning ordinary salaries can afford to remain in them.
