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The average price increase across the chosen country does not guarantee that any transaction will be profitable. Each case is individual, and the success depends on many factors - including the liquidity of the specific property, the method of real estate registration, and the skill of the realtor. We recommend consulting with local experts. You may find a large database of brokers and developers in various countries around the world, ready to answer your questions on Prian.info.
It looks like we are at the forefront of a new trend now.
| Period | Fluctuations of prices in Europe |
|
2000–2008 |
The housing prices in Eurоpe were rising at a moderate pace – on average by 3–5–7% per year. It was a period of tranquillity and optimism. Strong demand was supported by generous mortgage programs. In some countries, for example in Spain, banks issued loans for 110% of the value of the property, they not only did not require a down payment, but also helped to pay the associated costs of the transaction. However, for some countries this period was not so calm. For example, housing prices in Latvia soared by 70% in 2.5 years against the backdrop of joining the European Union. |
|
2008–2014 |
The global financial crisis, which began in the US real estate market, has reached Europe. And the price fluctuations have changed dramatically. Countries with overheated markets experienced a crushing collapse in housing prices, while more balanced regions experienced a moderate decline. Almost all kinds of properties became cheaper: houses and apartments in urban centers and popular resorts. The recovery of markets in different countries developed differently, but the downward trend in Europe remained until 2014. |
|
2014–2020 |
The economy in Europe began to revive, and the real estate prices began to rise as well. Banks increased mortgage lending at low rates, but they took the mistakes of 2000–2008 into account: they no longer issued a mortgage to everyone who wanted it. The Developers were also much more cautious during the implementation of new projects, so the pace of construction had decreased. The prices across Europe were rising by about 5% annually in general. However, some countries experiences a much faster growth - Estonia, Hungary, the Czech Republic, Latvia. |
|
2020–2022 |
The pandemic has changed the balance of power in the real estate market. The demand had jumped, but the supply could not catch up. As a result, the prices have increased very rapidly. By the end of the period, the property prices in almost all countries had significantly (up to 50%) exceeded the peak levels of 2007. There were only three exceptions: the prices in Greece, Italy and Cyprus. The prices have been growing much faster than rental rates during these years, and this has led to a decrease in the profitability of residential properties in Europe. |
|
2023–ХХХХ |
Housing prices have risen significantly as well as the loan rates, but the number of transactions has begun to decline. As a result, the prices started to decline The average decline of prices in Europe is still insignificant – about minus 2% per year. But in some countries the trend has proved to be much stronger, especially in Germany, Finland, and the Netherlands. |
It is still unclear how long the downward trend that began in 2023 will continue and how deep the decline will be.
But it is obvious that different European countries will experience the recession in their own way as it was before. This means that property buyers will have a good chance to significantly increase the capital by using real estate investments if they choose the right location and the right property object.
We suggest you a list of countries that have developed good conditions for further price increases.
The property buyers in Germany have obtained a rare opportunity in 2024. This country was the first one to meet the new downward trend: the housing prices in this country have fallen by 10% in 2023 - this has not happened since the 2000s! In the short term of 6-12 months, the decline is likely to continue. After that there is going to be a reverse, which is inevitable, because the fundamental factors remain the same and have become even stronger.
There is a chronic housing shortage in large cities. Developers were not able to keep up with the demand, and over the past couple of years the pace of development has decreased even further.
At the same time, Germany has radically reformed its citizenship law, which is likely to encourage many immigrants to strengthen their ties to the country. The demand for housing is likely to increase. Moreover, as soon as mortgage rates will start to decline (this process has already begun), the prices will begin to rise again.
There is a recession in Germany, but the economic situation in Greece is quite the opposite. Analysts from The Economist magazine have recognized its economy as the most efficient in the world. Unemployment is falling, GDP is growing, tourists are coming, the flow of investment is increasing - everything is just fine. This rise is also noticeable in housing prices: + 10% year-on-year, and in some regions the growth has exceeded 20%.
It is interesting that despite this breathtaking rally, house prices in Greece have reached the 2008 levels just now. The potential for growth has not been exhausted. In addition, local authorities are making efforts to increase the demand at the expense of foreigners: the country earns about €1.5 billion per year on its “golden visa” program.
Spain is one of the few countries that are currently developing on the contrary to the general European trend. The prices are falling or stagnating almost everywhere, but here they are rising in Spain.
How come? The local economy is growing faster than in the EU on average. In 2023, Spanish GDP expanded by 2.5%, European GDP - by only 0.5%.
The unemployment rate is falling, the income of Spanish households is rising, and the number of residents is increasing due to the influx of expats attracted by numerous immigration programs, such as golden visas and residence permits for digital nomads.
Moreover, it is important that housing prices in Spain are not overheated - they still have not reached the 2008 levels in many regions. However, construction in the kingdom is no longer as active as at the beginning of the 21-st century. This means that the deficit will continue to stimulate price growth for a long time, although it would not be skyrocketing.
Many experts thought that after Cyprus canceled its Citizenship by Investment program, the local property prices would collapse. However, that did not happen. On the contrary: the upward trend has become even stronger because of the steady increase in the cost of middle-class housing.
Unlike in most European countries, the number of sales in Cyprus is constantly rising. This is happening due to the local demand as well, because the Cypriots are now actively investing in rental houses and apartments. In addition, more than 25% of property sales are transactions with foreigners.
An important incentive for further growth is the new rules for accelerated acquisition of citizenship. Many skilled expats residing in Cyprus want to apply for passports and buy homes.
Serbia remained a sleeper for foreign property buyers for a long time. But everything is going to change very soon.
Many relocants (including physical persons and legal entities) have moved here over the past couple of years. And in July 2023, the Serbian Parliament has finally adopted amendments to the laws “On Foreigners” and “On the Employment of Foreigners”, so Serbia has become the easiest country in Europe for immigration. This will attract new people, and they will increase the demand for real estate.
Moreover, the international specialised exposition Expo 2027 will be held here in 2027. This event is going to bring multi-billion dollar investments in local infrastructure and promises a surge of interest from international investors, which will obviously affect the value of Serbian real estate.
Finally, the country is developing. For example, there is still no subway in Belgrade. So the prices for apartments are guaranteed to start rising as soon as the subway links start operating.
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Sources: 1) Bnpparibas, 2) Eurostat
Photo: Unsplash (Soff Garavano Puw, Noah Boyer, Sonya Brady, Miquel Migg, ,Secret Travel Guide Dimitrije Milenkovic)
