Market Trends of Europe Residential Real Estate Industry
Growth in transaction prices of new dwellings supporting the market
- House prices have increased by 18.2% in Q2 2022 compared to the same quarter the previous year. As a result, the Netherlands continues to be among the top five EU nations with the most significant growth in housing prices, as supported by data from Statistics Netherlands (CBS), the Netherlands Cadastre, Land Registry and Mapping Agency (Kadaster), and Eurostat. The transaction prices for both new and used owner-occupied homes are present in the house price index. In Q2 2022, the average increase in home prices across the EU was close to 10%. After Estonia (+27%), Czechia (+23%), Hungary (+23%), and Lithuania (+22%), the Netherlands experienced the most significant increase in home prices.
- The average transaction price for a newly constructed home increased by 16.9% in Q2 2022 compared to the same quarter year before. Additionally, it was the first time that the median selling price for newly constructed homes went beyond EUR 500,000 (USD 531,500). Existing owner-occupied homes typically cost 18.4% more than new ones. Compared to the first quarter of 2022, when it reached a record 20.3%, this growth was less significant.
- More than 47,000 owner-occupied homes were sold in Q2 2022. It represents a 10.2% decline from the same quarter last year but a 7.9% increase from Q1 2022. The number of new-build homes sold decreased by 13.8% yearly to about 8,000 transactions.
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Rental segment showing significant growth in the market
- Amsterdam was the most expensive city in the 22 European cities polled to hire a furnished private room during the third quarter of 2022. It was also one of the most expensive cities to hire a studio or one-bedroom apartment that was furnished. Similar to any other consumer-driven company, high rents are a major cause in many European cities. Prices will rise if supply lags behind demand.
- Rental prices are rising due to a combination of factors, including a lack of available space, high land, and building costs, and the desire of highly compensated workers to live centrally in desirable areas.
- While rents have been gradually increasing for years and years, Amsterdam has the highest absolute prices in Q4 2022 for each type of property, with an average of EUR 900 (USD 969.95) for single rooms, EUR 1,950 (USD 2102.56) for studios, and an astounding EUR 2,300 (USD 2478.77) for apartments. Amsterdam is not even among the top 3 European cities when we look at the changes in rental prices over the past year, showing that prices have risen so much that they are beginning to level off.
- In terms of annual growth for single rooms, Lisbon is in the lead with a 33.3% rise, followed by Berlin (28.4%) and Frankfurt (24%). Rome tops the list for studio rents, with a rise of no less than 45.8% year over year. It is closely followed by Hamburg (44.4%) and Reykjavik (40.4%). The rate of growth in apartment rents from one year to the next was 37.4% in Munich, 31.6% in Reykjavik, and 29.6% in Budapest. These are alarming numbers, but they are the result of rental markets returning to their pre-pandemic state and carrying on with their previous patterns. Most importantly, it emphasizes once more how critical it is to achieve an improved equilibrium between supply and demand.
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