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Determinants of Rent Prices: An Analysis of European Cities

Author

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  • Buiga Anuța

    (Babeș-Bolyai University, Romania)

  • Popa Mirela

    (Babeș-Bolyai University, Romania)

Abstract

Using the data of a sample consisting of 99 cities from 37 European countries (2024) this paper discusses the determinants of rent prices. The results indicate that rents are lower in areas with longer commute times and higher cost of living index, while high wages and high house price to income ratio (HPIR) lead to increase rent prices. In this paper, we constructed the Rent Index as average of four variables relating to the rents of one-room and three-room apartments in the city centre and in the suburbs. We identify the factors that explain the variation of the Rent Index using multiple linear regression. The overall conclusions of analysed models are mixed: salary is the strongest predictor in all models, if the city is a university one, we expect an average rent increase between 105.9 and 115.81 euro compared to non-university cities. If the city has a tourist attraction, the rent price will increase on average with a sum between 114.59 and 158.61 euro; the safety index and pollution index have significant effects on Rent Index; an increase of HPIR by one unit will lead to an increase in the Rent Index with 13.6 euros per month.

Suggested Citation

  • Buiga Anuța & Popa Mirela, 2025. "Determinants of Rent Prices: An Analysis of European Cities," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 70(1), pages 51-66.
    • Handle: RePEc:vrs:subboe:v:70:y:2025:i:1:p:51-66:n:1003
    DOI: 10.2478/subboec-2025-0003
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    More about this item

    Keywords

    rent price; European cities; quality of life; housing supply; housing supply demand; Rent Index;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D60 - Microeconomics - - Welfare Economics - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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