Housing affordability ratio: increase in the level according to family composition
The housing affordability ratio of households is an indicator of the ability to access and remain in housing. It measures the ratio between the cost of housing (rent charges or loan repayments as well as the normal household costs such as electricity or water, etc.) and a household’s disposable income (excluding housing aids - EUROSTAT definition). This indicator is about the evolution (2016-2019) of the affordability ratio for resident households according to family composition.
4.3% of households in Luxembourg are single-parent families
In 2019, 32% of households living in Luxembourg are single persons and 29.6% are couples without children. Couples with children made up almost a quarter of all resident households (24.5%). The single-parent families represent 4.3% of all households, and most of them are headed by a woman.
An affordability ratio of nearly 40% for single-parent families and less than 30% for other households with children
For any particular year, single-parent families have the highest affordability ratio for their dwelling and, with an increase of 14.1% in 3 years, it rose to 38.4% in 2019. On the other hand, for all other types of households, affordability ratio never exceed 30%, although they are close to in 2019. Thus, the lowest rates are observed among couples without children (less than 20%). The levels of affordability ratio of single people and couples with children are quite close over the entire period, between 23 and 28%.
In 2019, 32% of households living in Luxembourg are single persons and 29.6% are couples without children (source: EU-SILC survey, cross-sectional data, March 2021 version). Couples with children account for almost one quarter of households (24.5%) and single-parent families represent 4.3%. The other types of households (9.5%) are generally made of several generations of adults, with or without children. While the burden of housing cost has already been studied according to the tenure status of households, their standard of living, and even their seniority in their housing, this indicator will describe the affordability rate according to their family composition.
For any particular year, single-parent families have the highest affordability ratio for their dwelling. Indeed, starting from 33.6% in 2016, their affordability rate is 38.4% in 2019: + 14.1% in three years. On the other hand, for all other types of households, affordability ratio never exceeds 30%, although they get closer toward 2019. Thus, the lowest rates are observed among couples without children (less than 18% over the period), and it increased by less than 10% between 2016 and 2019. The levels of affordability ratio of single people and couples with children are quite close over the entire period, between 23 and 28 percent. Nevertheless, their evolution is quite different. The affordability ratio grew less rapidly among couples with one child (+6.1% between 2016 and 2019), compared to couples with at least two children (+13%) and single people (+18.8%).
As it was already specified in the affordability ratio by tenure status indicator, the affordability ratio measures the ratio between the housing costs (loan or rent + usual financial charges) and the disposable income of a household (without housing subsidies - EUROSTAT definition). Let us therefore compare the levels of these two factors and their evolution over time in order to better understand the previous findings.
Concerning the total cost of housing, single-parent families have been paying more than 1200 euros per month on average since 2017. This total amount is one of the highest compared to other households and only other families with children have a higher cost of housing. Moreover, housing costs have increased faster (+17.3% between 2016 and 2019) for these single-parent families, except couples without children (+19.4%). In comparison, these costs increased by 9.4% and 13.6% respectively among families with only one child, and those with at least two children.
At the same time, looking at disposable income levels reveals that lone-parent families have one of the lowest averages of disposable income, and only single-adult households appear to be less well-off than them. In addition, this income has not increased as much as other households: +6.2% between 2016 and 2019, against +6.9% for single people, +12.4% for couples without children or +11.3% for couples with one child.
Thus, combining high total housing costs, which increased more sharply compared to other families, and low disposable income on average - which also grew less rapidly than that of other households-, single-parent families appear to be the most vulnerable on the housing market.
Finally, by crossing the family composition and the housing tenure status variables, we observe that these tenure statuses and therefore the housing costs associated vary greatly from one category of household to another. Thus, whatever the year, the share of tenants renting at market price or owner-occupied with a mortgage loan is the highest among households with children (couples or single-parent families): 79% or more in 2019 against 54.7% among single people or 45.9% for couples without children. Nevertheless, the main difference between single-parent families and couples with children is the share of tenants that is much higher for the first group. In 2019, 37.9% of single-parent households are tenants renting at market price, and 41.1% are owner-occupied with a mortgage loan. Among couples with at least two children, for example, less than 20% are tenants renting at market price and 65.3% are owner-occupied with a mortgage loan. This large share of tenants renting at market price among single-parent families justifies once more the high affordability rate for these families. Indeed, the affordability ratio by tenure status indicator already showed that tenants renting at market price were the most vulnerable people on the housing market.
All private households residing in Luxembourg at the time of the data collection
EU-SILC, 2016-2019, transversal data, version of March 2021
In 2019, the affordability ratio of single-parent families reached a new high of 38.4%, whereas couples without any children was at 17.9%.