After the crisis, the property market in Europe grew steadily and calmly until 2020. And then - pandemic Covid-19, recovery in 2021, boom in 2022 and fall in 2023. What have the markets come to? And what comes next?
International consultancy Deloitte has released a report on the European new housing market for 2023. The study covers 24 European countries and 69 cities. The list includes Israel, which is not part of Europe territorially, but is among the associated states of the European Union.
Situation In The European Property Market
- Israeli new buildings have become the most expensive in Europe. The average cost per square metre in the country is €5,439. Austria, as in 2022, is second (€4,920 per square metre). And closes the top three Germany (€4 700).
- The least expensive new housing is in Bosnia and Herzegovina (€1,315 per square metre), Greece (€1,463) and Romania (€1,504).
- The price per square metre in a new building rose most of all over the year in Hungary - by 13.3%. There was a noticeable increase in Poland (+12.2%) and Portugal (+11.5%). In total, prices rose in 15 of the 24 countries under consideration. The biggest drops were in Italy (-10.7%) and... Israel (-4.6%).
- The most expensive city in the world is Paris. A new square metre in the French capital will cost €14,900. In Tel Aviv, the most expensive city in 2022, - €13,886, in Munich - €10,900. In three more cities prices are in the range of €7.5-10 thousand. These are London (€8,018), Amsterdam (€7,850) and Frankfurt (€7,700).
- More than in other European capitals, new buildings rose in price in Budapest: in 2023, the figures rose by 13.9 per cent, excluding inflation. Among non-metropolitan cities, the highest annual price increase was recorded in Marseille (+23.6%).
- The only country where activity in the construction sector increased last year was Bosnia and Herzegovina - however, this market is not very interesting for global investors. Europe, especially major cities, is still experiencing a housing shortage. As a result, governments are increasingly regulating rental markets.
- Investors are rushing into the built-to-rent segment - in 2023 it experienced a boom. Developers are targeting modern tenants by designing rental complexes with gyms and co-working spaces. As long as urban dwellers favour renting over buying, this type of investment will continue to grow.
- Inner London (i.e. excluding the suburbs) was the most expensive city in terms of rent (€33.8 per square meter), with Dublin and Paris in second and third place at €31.5 and €31.3 respectively. The rent exceeded €20 per square meter in ten other European cities. These include Barcelona (€30.6), Amsterdam (€27.3), Oslo (€26.3), Madrid (€25.4), Outer London (€23.7), Copenhagen (€22.4), Trondheim (€21.2), Munich (€20.8), Galway (€20.1) and Bergen (€20.1).
- The most inexpensive cities in the Balkans were:
- Patras (Greece) - €6.3;
- Burgas (Bulgaria) - €6.9;
- Turin (Italy) - €7.3;
- Thessaloniki (Greece) - €7.6;
- Varna (Bulgaria) - €7.8;
- Brasov (Romania) - €8.4.
Although Burgas was included in the list of cities with the lowest rents, it ranked first in terms of rate growth (+125.8%). They grew in all Bulgarian cities. In Sofia and Varna, for example, prices rose by 98.1% and 66.8% respectively - which was to be expected after Bulgaria's accession to Schengen and the Eurozone.
- Notable growth was recorded in Manchester (+51.4%), Porto (+35.6%), Inner London (+27.3%), Lisbon (+24.8%), Alicante (+21.7%) and Outer London (+21.3%). In some places, rents even fell in price, such as Lyon (-10.5%), Oslo (-6.1%) and Trondheim (-6%).
Experts' Forecast
Deloitte analysts, like their colleagues, expect prices to rise and demand to fall in the second half of 2024 - the market will continue to move in the same direction as a year ago.
Real estate will rise in price in most countries by the end of 2024. The only exception is France, where prices will continue to fall. They will remain at the same level in Austria, Croatia, Bulgaria, Denmark, Serbia, Slovakia and the UK.
Rental rates in most European countries will increase even more. The exceptions are Austria, Bulgaria, Croatia, Denmark, Poland, Romania, Serbia and the UK - where, as experts promise, rents will change only slightly, if at all.
Buying a home will become even more unaffordable by the end of 2024. This is why demand will continue to decline, particularly for first-time buyers. The gap between property prices and average wages will grow in the next three years. Tiny Slovakia, according to experts, will be the only country where purchasing power will increase by 2027.
The next three years are a good time to make money from renting. Especially where housing will become less affordable for buyers. Among those:
- Belgium
- Bosnia and Herzegovina
- Croatia
- Czech Republic
- France
- Israel
- Italy
- Norway
- Portugal
- Romania
- Serbia
- Spain
Among the promising trends is a focus on sustainability and digitalisation. Deloitte confirms that the majority of buyers are increasingly looking towards housing that has lower energy costs and a lower environmental impact.
Environmental standards are becoming stricter - as a result, more properties are being built with green spaces, and sustainable materials and technologies (solar panels and other energy-efficient systems, for example) are being used in construction.
And real estate is also gradually going digital. Blockchain technology is being used, buyers - in particular those in other countries - prefer virtual tours of homes, and personal presence is no longer required to sign a contract.