Neighbourhood Price Index 2019

The 2019 Neighbourhood Price Index determines the current trending cost of renting an apartment in neighbourhoods around the globe, as well as their respective affordability. The prices are therefore reflective of what an individual would find if they were searching for an apartment today. The study covers over 700 neighbourhoods in 50 cities around the world. These cities were chosen because they are either attracting influxes of highly skilled workers, or they are popular with individuals looking for lifestyle or economic opportunities.

The rent price is per square meter for an unfurnished apartment, and is split between a single person and a family size. To determine affordability, the study has included the average salary required, the deviation % (how more or less expensive a neighbourhood is compared to the average in each city), the disposable income required to afford rent and the number of hours on minimum wage an individual must work to afford rent in each neighbourhoods.

Neighbourhoods and districts are defined in myriad ways around the world, so for the purpose of this study, the research utilised the city divisions most commonly used in the real estate market.

Below you can find a description of each factor within the study and the sources used.

Single Person Apartment

• The definition and size of a single person apartment depends on the country and sometimes city of origin. Average apartment size is mostly around 50 sq.m. (+-10 sq.m.) with an exception of Seoul: 110 sq.m. and Shanghai: 75 sq.m. People tend to live in bigger families in these cities, therefore the average small apartment is bigger than in other places.
• Sources: Dwelling Size Surveys, Local Governmental Housing Authorities and news outlets such as BBC and New York Post.

Family Apartment

• The definition and size of a family apartment depends on the country and sometimes city of origin. Average apartment size is mostly around 105 sq.m. (+-15 sq.m.) with an exception of Seoul: 170 sq.m. and Shanghai: 125 sq.m. People tend to live in bigger families in these cities, therefore the average family apartment is bigger than in other places.
• Sources: Dwelling Size Surveys, Local Governmental Housing Authorities and news outlets such as BBC and New York Post.

Median Rent/m²

• Median rent per square meter. Reflects current prices in the market. Data sources acquired from more than 30 different websites of apartment listings. Data quality controlled. If a district is more than 3 standard deviations away from the mean of the city and has a small sample size (less than 20 individual listings), it is deemed an outlier and adjusted accordingly.
• Sources: Nestpick, immobilienscout24, immowelt, Rightmove, Idealista, Trulia, Hotpads, Kijiji and more.

Monthly Salary Required

• Monthly salary required to afford the apartment. We use the definition of the United States statistical department to denote affordability. This definition evolved from the United States National Housing Act of 1937, where 30 percent of household income was said to be an amount that a household could devote to housing costs before that household was said to be “burdened”. The 30 percent mark has been used since 1981. More information about this fact can be accessed in the source report below.
• MonthlySalaryRequired=RentSqM*AvgApartmentSizeCity*10/3
• Source: https://www.census.gov/housing/census/publications/who-can-afford.pdf. Pricing data acquired from the average apartment sizes per city and rent/m².

% Deviation from Median Price per City

• Deviation from the median price per city for single person apartment rents per sq. m. If the deviation is 100%, that means that the median price of the district rent is the same as the median rent in the city. If it is more than 100%, the apartments in the district are more expensive than average (if it is less, then less expensive).

% of Disposable Income Required to Pay Rent

• % of disposable income required to pay rent, based on the average disposable income per person, per city, in order for one person to pay for a single person apartment. The larger the percentage, the more expensive the apartments are. In some districts, it is not possible for a single person to live in a small apartment on average (2 or more people have to live there).
• Disposable income - income after taxes and social security charges, that is, income for saving and spending.
• Sources: OECD, Eurostat, local statistical departments and other sources when the aforementioned ones are not available. Data adjusted for international comparability.

Hours of Work on Minimum Wage to Pay Monthly Rent

• Hours of work on minimum wage to pay monthly rent.
• Data collected on the annual level, so an assumption of 4.34524 weeks per month and a 40 hour work week had to be made.
• Sources: OECD, Eurostat and local statistical departments. In the cases of countries with no minimum wage, the wage of lowest paid job in the country is taken.

Currency exchange correct as of 11.01.2019

Correction Note: As of 29.01.2019, neighborhoods with the name ‘Downtown’ and ‘West’ were updated due to a technical error.