Tranio.com analysed major trends in 33 residential property markets and observed high demand, decreased supply, and rising prices in the residential property markets of most European countries and the US in Q3 2016.
Property prices fell only in four of the observed countries: Italy, Greece, Montenegro, and Cyprus. These markets are still in recession.
Data from Trading Economics show that, by 2020, prices can be expected to rise in 25 European markets, as well as in the US market. Prices will trend downwards only in Denmark, Cyprus, Lithuania and Malta, and in three other countries — Slovenia, Croatia and the Czech Republic — prices will remain stable.
Residential property prices and their dynamics in Europe and the US, Q3 2016 Sources: Eurostat, Monstat, Numbeo, Reidin, Trading Economics, Zillow, Bank of Greece
|Country||Price dynamics, Q3
||Average price, EUR per sq m||Forecast up to 2020|
The hottest markets: Hungary, Latvia and Iceland
The Hungarian property market was the hottest in Europe in Q3 2016.
The Icelandic market has also demonstrated price growth over 10%. House prices in this country are growing due to supply shortage. In addition, tourism plays a big role: as reported by Reuters, in Iceland the number of vacationers (2.37 million per year) exceeds the number of inhabitants (330,000) seven to one. According
The three pillars: the US, the UK and Germany
The US property market
Germany, the largest property market in Europe, did not experience a sharp slump in prices after the crisis, unlike many other European countries. The local market is generally characterised by stability and predictability, and residential property prices have been growing continuously since 2008. Between 2011 and 2015, residential property grew in price by 55% in Germany, more specifically, by 65% in Munich and by nearly 100% in Berlin. According to Eurostat, in Q3 2016, the average price nationwide increased by 6.2% on Q3 2015, and Trading Economics forecasts further appreciation of German property. As the prices in Germany have tended to grow and the market has remained stable, many investors continue to choose this country for investing
The second largest European real estate market is the UK. According to Eurostat, property in the UK appreciated 7.2% in Q3 2016. However, prices for residential property in many new projects in London started declining because of the Brexit referendum. For example, according to Savills, between 2011 and 2015 the number of transactions
The recovering markets: Bulgaria, Spain, Portugal and Ireland
The Bulgarian real estate market has been making an impressive comeback. Property prices in this country plummeted
Spain is one of the countries that the 2008 crisis hurt the most. Prior to 2007, the Spanish property market had been among the "hottest" in Europe, but after the economic downturn, prices for homes and flats fell steadily until 2015, when the market bottomed out. According to Eurostat, in Q3 2016 prices went 4% up on the previous year, and Trading Economics expects them to grow up through at least 2020. The market is at the early recovery stage and, therefore, still has great price growth potential; Spain offers good speculative investment opportunities. Notably,
Unlike the other countries of Southern Europe, Portugal passed through
The Irish market was strongly affected by the consequences of the 2008 crisis similarly to the Spanish market. According
The struggling markets: Italy, Greece, Cyprus and Montenegro
Italian property prices have been declining since 2008, and prices in the country continue decreasing, though this decline is slowing down. According to Eurostat, in Q3 2016 local residential property prices fell 0.9% on the same period in 2015. Trading Economics expects the Italian market to begin its recovery soon. This means that now, when the prices are approaching their minimum level, the moment is right to enter the market. Many foreign investors have already taken note of this trend and began actively closing transactions in Italy. Italian property has become most popular among the citizens of the UK, Germany, the US and France.
Greek property now costs 42.5% less than in 2008, and prices keep falling. According to the Bank of Greece,
In Cyprus, the problem is the same: the rate of unemployment is high. However, it has been falling recently and, according to Trading Economics forecasts, will constitute 11% by the end of 2017 versus the 15.5% in 2015, which can slightly alleviate the local residential property market situation. Cyprus showed the signs of recovery in 2015, but in Q3 2016 there was another decline: according to Eurostat,
Of the 33 countries considered in the Tranio.com survey, in Q3 2016 prices fell the most in Montenegro: by 4.9%
For property investment in 2017, experts at Tranio.com recommend:
- Germany — to those choosing low-risk investment in a stable rental business
- Spain — to those aiming
for high-risk, high-yieldinvestment (redevelopment).
Yulia Kozhevnikova, Tranio.com