Buying real estate in Europe: the rating of prospective cities
The European Land Institute together with PwC has conducted a study of real estate markets in various EU cities and the prospects for their development for 2023. The study is based on a comprehensive survey of experts from the field of development, consulting, investment, and others. As a result, analysts published a report that tells you in what cities buying real estate in Europe will be a profitable investment.
London has become the leader of the rating, followed by Paris and Berlin. Those are the cities experts highlighted as the most profitable investments in the real estate market. Madrid, Munich, and Amsterdam have a good chance of receiving a high income. Also on the list are Milan, Barcelona, and Frankfurt.
According to the study, the geopolitical conflict in Europe affected the situation in the real estate segment almost immediately after its beginning in February 2022. The ensuing increase in inflation and rising energy costs exacerbated the situation and led to higher interest rates. Accordingly, demand for mortgages declined, as did the activity in the market as a whole. Many surveyed experts believe that in the near future we should expect a recession. Analysts believe that at the moment real estate investments in all 30 cities in Europe can hardly be called promising, as the situation is unstable.
The decline in demand for real estate is observed in many European countries, including in the markets, which are considered the most expensive. For example, analysts predict that this year housing prices in Finland will fall by an average of 2%, and in Helsinki and its suburbs – by 3%. This decline will be the largest since 1995. Rising interest rates have led to skyrocketing housing prices, making it unaffordable for a large number of citizens. According to the Helsingin Sanomat, the rate of increase in consumer prices in the country is the fastest since the 1980s. At the same time, the authorities have raised the size of interest rates to the level of 2009.
According to experts, the real estate market in Finland is currently experiencing stagnation, which is similar to its condition during the crisis. However, analysts are optimistic in general, they believe that this situation is temporary. It is expected that next year real estate market prices will return to their normal growth. This will be facilitated by the stabilization of interest rates at the same level and a slowdown in construction activity, which is now quite high.
The local real estate market has been booming for more than 10 years, and it is not surprising that it is now entering a decline phase. However, this does not mean that a crisis is coming – there is no reason to worry about a collapse.