Housing costs have exacerbated income equality in Germany

Changes in housing costs have dramatically exacerbated the rise in income inequality in Germany since the mid-1990s, according to new UCL research. It found that 20 per cent of those with the lowest incomes (bottom fifth) saw their share of household income spent on housing rise from 27 per cent in 1993 to 39 per cent in 2013. In contrast, 20 per cent of those with the highest incomes (top fifth) experienced a decline in housing costs from 16 per cent in 1993 to 14 per cent in 2013. The study was led by Professor Christian Dustmann (UCL Centre for Research and Analysis of Migration (CReAM)) with Professors Bernd Fitzenberger and Markus Zimmermann (Humboldt University Berlin). The researchers found that the rise in income inequality was aggravated when real disposable income (after housing costs) is taken into account. Inequality between the net household income of those on middle incomes compared to the bottom ten per cent (50/10 ratio) increased by 22 percentage point between 1993 and 2013 before housing costs were deducted. However, this increased threefold to 62 per cent after housing costs were deducted.