Trends in Europe’s Property Market

 

House prices have increased across most of Europe and in many cases are now higher than pre-crisis levels, with some countries performing well above average. This is true in the case of Portugal and Hungary, where residential prices have risen by more than 9% on average each year since 2016.

Some trends in the market have been accelerated by the coronavirus pandemic. For more information about this, please see the embedded PDF.

How the Coronavirus Pandemic has Impacted EuropeanReal Estate

Synchronised Growth

The rise in house prices across all of Europe can be partially attributed to the economy recovering in a synchronised manner. This began in 2013, and in 2016 growth sped up in most European states. The economic upturn also led to a rise in employment levels, with the average unemployment rate falling from 11% in 2013 to 6.3% in the third quarter of 2019.

These changes have led to an increased demand for housing, which has further pushed up prices in some residential markets. At the same time, lower interest rates have increased the desire for property from those interested in investment, such as Razi Salih.

Europe’s Housing Market Recovery

Cities

Both the movement of house prices and the synchronisation of housing markets are much more pronounced in the large cities of countries with advanced economies. The increased growth in house prices in larger cities when compared to the nation’s average suggests a general trend towards urbanisation. Cities are also attractive from an investment perspective because of their generally excellent locations, and because they are popular destinations for tourists.

Affordability

Housing affordability indicators do not generally show increasing tension across Europe. However, there are exceptions. The percentage of European households allowing more than 40% of their disposable income for housing costs stood at 9.9% in the last quarter of 2018, down from 11% in 2007.

However, this indicator does suggest that households in the UK, Denmark and Germany are slightly financially overburdened when it comes to housing costs. In countries such as Austria, the Netherlands and Belgium, house prices are nearly at an all-time high, and affordability rates are falling very low.

Whilst on average there are no signs of tension within the European property market, there are exceptions in some large cities where house prices and local income are out of sync.