Europe Condominiums and Apartments Market Size

Europe Condominiums & Apartments Market Analysis

The Europe Condominiums and Apartments Market is anticipated to register a CAGR of over 5.5% during the forecast period. The European market is facing many challenges due to the Russia-Ukraine war and inflation. However, the market is showing sustainable growth. The market is driven by increased demand for rental properties.

• Europe is on the verge of a significant slowdown in the real economy and the underlying real estate markets. With real estate capital values already falling, 2023 could be an excellent time to buy for core investors who are still under-allocated into the sector. With inflation and rising interest rates, the real estate market is not looking promising for investors. The war in Ukraine has impacted Europe's market, and the real estate industry may deal with the economic and political fallout for the foreseeable future. While industry leaders believe Russia's invasion of Ukraine will have little direct impact on their property portfolios, the war's consequences are visible.
• There is a widespread belief that high energy prices and a recession will cause vacancies and rents to fall. However, real estate companies are not as leveraged as they were before the global financial crisis, owing to regulatory changes over the last decade. Thus, a 5-10% inflation rate in some markets and the threat of stagflation may continue to dampen investor demand in 2023. Due to a disastrous "mini-budget" and a cost-of-living crisis, the British property market activity stalled in October 2022, and house price growth registered its slowest quarterly level since February 2020. The spike in mortgage rates in the aftermath of the Truss plan led to a sharp decline in housing activity. The real estate group Zoopla stated that it was "more pronounced in new buyer demand than sales agreed." Buyer demand fell by 44% Y-o-Y in October 2022, while sales volumes fell by 28% Y-o-Y but remained on par with the pre-pandemic period.
• Due to a lack of available housing, Germany's housing prices continue to rise, albeit at a slower pace. Apartment prices increased by 5.84% Y-o-Y till Q1 2022, following increases of 7.68% in Q4 2021, 8.96% in Q3 2021, 11.68% in Q2 2021, and 9.59% in Q1 2021. Ultra-low borrowing costs, urbanization, healthy household finances, and strong economic growth have boosted the demand. Years of extremely low-interest rates have made it simple for households to upgrade to larger, more expensive homes and for first-time buyers to get on the property ladder. The migration crisis has added to the already high demand in recent years.
• After a five-year boom, the French housing market is showing signs of slowing, with rising interest rates and tighter lending standards reducing sales demand. According to data from France's National Institute of Statistics and Economic Studies, second-hand property price growth slowed in Q2 2022, while real estate developers reported a sharp decline in demand for new housing in October 2022. In Belgium, in the medium term, the number of households is expected to rise over the next decade, supporting demand and, to some extent, prices. Belgians generally have a strong belief in the housing market's stability, which reduces the likelihood of a significant price correction. Even during the financial crisis, when house prices in several European countries plummeted, Belgian house prices experienced only a minor correction.