Over the past decade, housing prices have risen in most FUAs, with the biggest increases in large FUAs
Over the past 10 years, large FUAs (with 1.5 million inhabitants or more), where housing supply and available land are limited relative to demand, saw the highest growth in housing prices at nearly 68%, followed by midsize FUAs (between 250 000 and 1.5 million inhabitants) at 50%, small FUAs (between 100 000 and 250 000 inhabitants) at 37% and very small FUAs (with fewer than 100 000 inhabitants) at 16% (Figure 1.20 and Figure 1.21).
The rapid increase in housing prices in large FUAs has further exacerbated disparities in housing markets and added to longstanding pressures related to housing affordability. While, in general, housing prices tend to be higher in cities with larger populations, in practice, the difference remains moderate until the city becomes large. For countries with available data by FUA size, housing prices are 18% higher when going from a very small to a small FUA and are another 18% higher when going from a small to a midsize FUA. However, the gap widens significantly to 46% when comparing large FUAs to midsize ones. Overall, housing prices in large FUAs are now 68% higher than in small FUAs and 86% higher than in very small FUAs, as these disparities have increased by an average of 20 p.p. over the last 5 years. In Hungary, Korea and the United States, where disparities in housing prices between large and very small FUAs are the most pronounced, this gap exceeds 100% (Figure 1.17).
Housing costs – including spending on rents and mortgages, which are influenced by housing prices – represent a significant burden on household finances. On average, households in OECD regions spend nearly one‑fifth of their disposable income on housing. In 2022, the average difference in housing costs between the most and least expensive regions within the same country was around ten p.p. This gap is even larger in Colombia, the United Kingdom and the United States (over 15 p.p.). Indeed, in Bogotá in Colombia, Greater London in the United Kingdom and California in the United States, housing costs account for 35%, 27% and 24% of household incomes respectively (Figure 1.18).
Owning a home outright – without a mortgage – can buffer financial or economic shocks that impact housing affordability. Over the past decade, the rate of homeownership outright has been stable across OECD countries (at around 45%). In some capital‑city regions like Berlin in Germany, Stockholm in Sweden and Greater London, less than 1 in 4 people owned their homes outright (and less than 55% when considering ownership with a mortgage). Within countries, the difference in homeownership between the regions with the highest and lowest ownership levels is around 20 p.p. on average (for both ownership with and without a mortgage) but, in a few countries, including Austria, Colombia and Germany, this difference can get close to 40 p.p. or more (Figure 1.19).
