Rising housing costs, economic recessions and demographic changes around the world have given renting a big boost in recent years. Has the world entered ‘the age of renting?’
So what does this data say? In an international study, US-based internet listing service, RENTCafé analysed the percentage (or share) of renters and owners in 30 of the most populous developed countries around the world, including the U.S., Canada, Russia, Japan, Israel, Australia and some European countries.
- Australia’s renter share saw a 4.3% increase between 2010 and 2015, while countries like Ireland and Denmark saw a three times larger increase in their share of renter households. The UK is leading the pack with a whopping 21.6% increase in renter share, from 2010 to 2015.
- 30.9% of the population rents in Australia, while the majority of people still prefer to own the home they live in.
- Switzerland is the only country where more than half of the population rents (56.6%).
Owning versus Renting around the world: 29 of 30 countries are majority homeowners
Of all 30 countries analysed, only in Switzerland more than half of the population rents – 56.6%. Besides Switzerland, 4 out of the 30 countries had a percentage of renters above 40%, and, despite the latest push towards renting among Millenials, both the U.S. and Australia are not among them.
Those countries are Hong Kong (49% renters), Germany (48.1% renters), Austria (44.3% renters) and South Korea (44.8% renters).
Comparatively, countries with low shares of renters are Singapore (9.7% renters), Slovakia (10.7%), Russia (12.9%), Poland (16.3%), and Norway (17.2%).
Renting on the rise: European countries see a surge in renters
Despite home ownership remaining predominant around the world, renting is on the rise. 21 of the 30 countries RENTCafé examined saw increased in their renter population, with Europe in the first position. In fact, 8 out of the 10 countries with the largest share increase from 2010 to 2015 are in Europe: the United Kingdom, Ireland, Denmark, Greece, Slovenia, Spain, Slovakia and Finland.
The United Kingdom’s share of renter population jumped by 22% from 2010 to 2015, the largest gain the world. In net numbers, the UK added a massive 2.1 million renting households to its 65 million total population during the time period studied. The increased demand for rentals had an effect on rent prices as well, which rose by 14% while house prices increased by 5%, according to OECD data. In other words, the cost of rent increased almost three times faster than house prices from 2010 to 2015 in the United Kingdom.
Renting also gained popularity in Ireland, where the share of the population that rents increased by 12%, the second highest change of the countries studied. In net numbers, the increase was by a half a million new renter households, representing over one-tenth of Ireland’s 4.7 million total population. At the same time, the country boasts the most spectacular growth in GDP among the 30 countries we analysed. During this time period, Ireland’s per capita GDP grew by 57%, according to data from the Worldbank, thanks to growing exports and foreign companies relocating investments for tax reasons.
With a rise of 11.7% in renter share, Denmark saw the third largest upward change. The increase in demand for rental housing resulted in a price hike of similar magnitude, as rentals became 12% more expensive during the same time period.
Other countries that made the top 10 for highest increases in renter share out of the 30 countries studied were the United States (9.3%), Greece (9.2%), Slovenia (8.6%), Spain (7.9%), Slovakia (7%), Finland (6.2%) and Hong Kong (5.3%).
How does the United States compare to Europe?
The U.S. is in 4th place with a 9.3% increase in renting population, gaining in net numbers 6.2 million renter households between 2010 and 2015. The percentage increase in the U.S. may not be as high as the UK’s 22%, but it is more than double the European Union’s average growth of 4%. EU averages rarely tell the whole story, however, so here are some examples:
The share of renters in Greece and Slovenia saw growth rates similar to those in the United States, both around 9%. Significant changes were also recorded in Spain and Slovakia, up by 8% and 7%, respectively.
Rentership remained constant in Portugal, Norway, and Belgium. Countries with a long history of renting, like Switzerland and Germany, didn’t see huge changes either, with the share of renting households expanding by only 2% and 3%, respectively.
Countries where more than 40% of the population are renters
- Switzerland 56.6% renters: The share of renting households in Switzerland grew by 1.8%, while the country population was down by 0.33%. As per capita GDP soared by more than 18%, housing prices followed suit increasing by 24.3%, while rent prices were up by a moderate 4.5%.
- Hong Kong 49% renters: Similar to Switzerland, the country’s population increased by a mere 0.81% between 2010 and 2015, while the share of renting households expanded by about 5%. Hong Kong had a 20% GDP boost during the same time period.
- Germany 48.1% renters: Germany’ s population shrank by 1.81%. The country’s policy is immigration-friendly and newcomers tend to be renters, so it doesn’t come as a surprise that the proportion of renting households is high.
- South Korea 44.8% renters: The share of people who rent dropped by almost 2% in South Korea, as the average income saw an upward change of 8% between 2010 and 2015.
- Austria 44.3% renters: Austria had a slight drop in population, while the share of renters rose by close to 4%. Housing costs here became considerably more expensive: house prices rose by 16% and rent prices by 20%.
In countries where mortgages are hard to come by, properties are expensive and laws are favourable to renters, people rent more. There were no spectacular changes among the top 5 countries with the highest percentage of renters. Nonetheless, in most countries around the world, the majority of people still prefer to own the home they live in.
Countries with continuous growth in renter population
The UK, USA, New Zealand and Finland’s renter population expanded every year from 2010 to 2015, but at different rates. For example, the increase in the share of renters in the UK (22%) was bigger than that in the other three countries combined.
Countries with a culture of property ownership
As RENTCafé analysed and compared this data, an interesting pattern took shape: the more developed the country, the more people tend to rent, and vice-versa. This is most obvious in Europe, where formerly-communist countries are incurable homeowners. It’s first and foremost a cultural thing, but laws and regulations in certain ex-communist countries can make renting difficult too.
While in Western and Central European countries, such as Switzerland and Germany, around half of the households were renting in 2015, in the Czech Republic only 2 out of 10 households were choosing to do so. In Russia and Slovakia, the share of renters is even lower, only 1 out of 10 households didn’t own their home in 2015. Owning property is the holy grail of the Eastern European society, a much-coveted and highly-valued right that was once taken away. Long story short, the further East you go in Europe the more people own and the further West you are the more people rent, more or less. Zoom in on the map below to see a few more examples.