A January 2025 analysis by the Resolution Foundation asked a useful question about international living-standard comparisons: do standard price measures reflect what lower-income households actually spend their money on? Its answer was that housing deserves more weight in comparisons of poorer families because it takes up more of their budgets and is expensive in the UK.
The briefing, “Whose price is it anyway?”, found that low-to-middle income households in Britain devoted 22% of their budgets to housing, compared with 13% among higher-income households. In this analysis, housing includes rent, utilities and maintenance. The Foundation compared category prices using OECD price data and its own UK-focused spending weights; it estimated UK housing costs at 44% above the OECD average, while food was 12% below that average.
That combination helps explain why an overall price index may not capture the pressure felt by households whose spending is concentrated on essentials. The report’s adjustment widened some international income gaps. For a household at the 10th percentile, the Foundation estimated that the German equivalent had £2,300 more purchasing power than its British equivalent, using income and prices in 2022. With a more aggregate price adjustment, the gap was £1,700. The comparison is an analytical estimate, not a claim that every German family is better off than every British family.
There are important limits. The briefing uses UK household spending weights to make the comparison; it does not fully model how households in other countries change their spending in response to local prices. Its housing category excludes mortgage interest in the main comparison, although it includes rent, utilities and maintenance. Results can differ with another method, income measure or year of data. The 44% figure is therefore a result of a specific 2025 analysis using 2022 price information, not a current rent or house-price statistic.
For property readers, the central point is about household budgets: housing takes a larger share of lower-income families’ spending, so high housing costs can have a disproportionate effect on what remains for other needs. The research does not estimate the impact on any individual renter, homeowner or local market. It provides one carefully defined way to compare national spending power, alongside other evidence on incomes, housing supply, rents and household circumstances.
This article preserves the original archive date and attributes the analysis to the Resolution Foundation. Figures should be read with the report’s method and data year in mind.