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PROPERTY

REVEALED: Where in Europe have house prices and rent costs increased the most?

Is it time to buy a property in Italy, Cyprus or Greece? House prices have shot up across Europe in recent years but there are major differences between certain countries.

REVEALED: Where in Europe have house prices and rent costs increased the most?
Italy is one of the few countries where property prices have decreased compared to 2010. (Photo by Nils Schirmer on Unsplash)

House prices have risen by an eye-watering 45 percent, and rents by 17 percent, across the EU since 2010, the latest figures released by the EU statistical office Eurostat reveal.

However, there are major differences among countries. In Austria, house prices have more than doubled and rents have increased by 45 percent compared to over a decade ago. In other countries, they have stalled or declined over the same period.

Greece is a notable example, with prices plummeting by 23 percent and rents by 25 percent between 2010 and 2021.

In Italy, house prices have fallen over overall since 2010 although like much of the EU they have been rising again in recent years.  Rent prices in Italy have registered only a modest increase, while Spain has recorded very small rises in both rents and house prices.

Here is the situation in the countries covered by The Local, according to Eurostat.

Finding a new home abroad?

Between 2010 and the first quarter of 2022, house prices have more than doubled in Austria (+114 percent) and have grown even more in Estonia, Hungary, Luxembourg, the Czech Republic, Latvia and Lithuania.

READ ALSO: EXPLAINED: What you need to know about buying property in Germany

In Germany, house prices shot up by a hefty 94 percent, in Sweden by 92 percent and in Norway by 91 percent.

Denmark (59 percent) and France (29 percent) also recorded double-digit growth.

Spain was the country with the smallest rise, 3 percent, among those countries covered by The Local.

Over the same period, prices have declined in Italy (-10 percent), Cyprus (-8 percent) and Greece (-23 percent).

READ ALSO: EXPLAINED: The hidden costs of buying a home in Italy

According to Italian real estate agency Tecnocasa, house prices in the country are now 29 percent lower than in 2010, even though a slow upward trend started in 2017. Only Milan bucks the trend, with an 8.5 percent increase between 2010 and 2021.

The reasons behind these data, according to Fabiana Migliola, director of Tecnocasa’s research unit, are dwindling salaries and low capital availability, with most buyers being able to afford properties of up to €250,000.

“Of course, a modest growth of real estate and lower prices compared to many other countries inside and outside of Europe make our country attractive to investors,” Migliola said. “This is a phenomenon we have recorded above all in the holiday home market, as 2021 signalled an increase in the number of holiday homes purchased by foreign buyers, especially from the US, France and Eastern Europe.”

2022 could be a year of adjustment, she continued, but rising interest rates could have an impact on buyers who finance their home purchases with a mortgage.

Looking at prices, the agency forecasts a recovery with a rise between 2 and 4 percent, with high demand currently from Italians.

Scaffolding on a high-rise apartment block

Austria has seen the highest average rent increase over the last 12 years. (Photo: Tobias SCHWARZ / AFP)

Where is it cheaper to rent?

Rents have not risen quite as much as house prices, but they have risen steadily since 2010.

Between 2010 and 2022, rent increased by 17 percent on average across the EU. The highest growth among the countries covered by The Local was in Austria, with a whopping 45 percent rise. Denmark (21 percent), Sweden (21 percent), Germany (17 percent) and Switzerland (10 percent) also experienced a double-digit rise.

READ ALSO: Property: How to find a rental flat when you arrive in Austria

Increases were more modest in Italy (7 percent), Spain (5 percent) and France (8 percent).

The highest growth was in Estonia (177 percent), Lithuania (127 percent) and Ireland (77 percent).

On the other hand, in Greece, rents decreased by a quarter over the period, and Cyprus recorded a -1 percent.

The problem of affordability

While average increase rates only give a partial picture of the real estate market, an additional indicator cited by Eurostat is the housing cost overburden rate, the percentage of people spending 40 percent or more of their disposable income on housing.

READ ALSO: 5 of the most affordable places to buy property in France

Despite its plummeting house prices and rents, Greece had the highest rate in 2020, with one in three people (33.3 percent) spending 40 percent or more of their income on housing.

Other European countries with a high-cost overburden rate are Denmark (14 percent) and Switzerland (14 percent).

Just below the 10 percent line stand Norway and Germany (9 percent), Spain (8 percent), Sweden (8 percent) and Italy (7 percent).

Despite the significant rise, Austria has a relatively low-cost overburden rate, at 6 percent.

How has Brexit impacted British buyers?

For British citizens, Brexit may have added difficulties to the purchase of properties in EU locations. Countries such as Austria have specific restrictions for non-EU citizens and where there are no restrictions, higher taxes and new immigration rules may result in fewer British buyers entering the market.

In Spain, it was reported this week that purchases by British residents, which used to make up almost a quarter of all transactions (24 percent), now only account for 12 percent.

However, a recent survey among 900 British buyers found that only 4 percent had given up plans to purchase a property abroad due to the difficulties caused by Brexit and the Covid-19 pandemic. Some 11 percent went ahead as planned last year and 85 percent are still planning to buy.

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This article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK.

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RENTING

EXPLAINED: The German cities where rents are rising fastest this year

People searching for a flat in German cities including Hamburg, Cologne and Berlin are in for a nasty surprise as rents are going up significantly, according to a recent study.

EXPLAINED: The German cities where rents are rising fastest this year

Real estate platform ImmoScout24’s recent ‘WohnBarometer’ shows the development of asking rents for the second quarter of 2022 in Germany as a whole, and the seven largest city areas.

Asking rents in new lettings for existing flats rose above €12 per square metre for the first time in Hamburg, and above €11 per square metre in Berlin.

In Berlin, Frankfurt am Main and Stuttgart, asking rents for new-build flats have risen above €15 per square metre.

What’s the picture across Germany?

For the second quarter of 2022, the WohnBarometer shows that the asking prices for rental flats across Germany have risen significantly more than in previous quarters.

On average, the asking price for existing flats was 2.7 percent more expensive to let than in the previous quarter. Newly built flats were on average 1.8 percent higher than in the previous quarter.

The average asking rent for existing flats in the second quarter was €7.66 per square metre. New-builds were offered for an average of €10.59 per square metre.

Meanwhile, demand for rental apartments shot upwards by 48 percent in the second quarter of 2022.

READ ALSO: Single people and large families ‘pay more for rent in Germany’ 

Where is the situation particularly bad for existing rentals?

Those eyeing up big cities as a place they want to settle in face a particularly hard time. 

Hamburg recorded the highest price dynamics in the area of existing rental flats older than two years in the second quarter – but it remains in fourth place in the rental price comparison of the seven largest German cities.

On average, the rent level in the Hanseatic city was €12.22 per square metre in the second quarter of this year. A rental flat with 70 square metres costs an average of €855.40 per month ‘cold’ – before other costs – Nebenkosten – are added on.

Flats in Hamburg's Eimsbüttel area.

Flats in Hamburg’s Eimsbüttel area. Photo: picture alliance/dpa | Daniel Bockwoldt

The real estate portal expects rents for existing properties in Hamburg to rise by nine percent this year alone. That would be two percentage points more than the inflation rate expected by the Bundesbank for 2022.

And in a city with a home ownership rate of 21 percent, this affects many of the 1.85 million residents.

From the first to the second quarter of 2022, asking rents in flat ads in Hamburg have risen by five percent. 

This is by far the highest value in Germany’s seven largest cities. Cologne achieved the second highest increase with 3.7 percent, while rents in Stuttgart fell by 0.7 percent.

In Berlin, asking rents for existing flats rose by just 1.4 percent, but broke the €11 per-square-metre mark.

Berlin nevertheless remains one of the cheapest of the large cities in Germany. Only Düsseldorf, at €10.81 per square metre on average, is lower. Cologne is the third least expensive place to rent with an average of €11.58 per square metre, according to asking prices for existing properties.

The graph shows the average costs per square metre for existing properties.

The graph shows the average costs per square metre for existing properties. Screenshot: ImmoScout24

Munich remains the most expensive city for renting with an average price per square metre of €16.93 per square metre. With a decrease of 0.7 percent for existing rental flats to €12.26 per square metre, Stuttgart was the only city to record a slight price decline in rents compared to the first quarter.

What about new build flats?

In the second quarter of 2022, Berlin recorded the largest price increase among the cities for new flats for rent, with an increase of 4.5 percent. These were offered in new lettings on ImmoScout for an average of €15.37 per square metre, exceeding the threshold of €15 per square metre.

In the German capital, the average monthly ‘cold rent’ for a new flat with 70 square metres is €1,075.90. Berlin is now above the level of Düsseldorf, Hamburg, Frankfurt am Main and Stuttgart.

But Frankfurt and Stuttgart also cracked the €15 threshold for the first time in the second quarter. In the financial capital, the rent level rose by 2.6 percent from the first to the second quarter to €15.17. Stuttgart is just above this at €15.24 per square metre.

In Munich, asking rents for new flats increased by 3.1 percent. With an average asking rent of €19.64 per square metre, Munich remains the most expensive city in Germany. In Cologne, asking rents for newly built rental flats rose only moderately, by 1.7 percent to €12.88 per square metre.

Graph shows the average costs per square metre for new build flats in cities.

Graph shows the average costs per square metre for new build flats in cities. Screenshot: ImmoScout24

How is demand affecting the situation?

Experts say the dynamics are changing on the rental and property markets in Germany.

“Demand continues to be significantly higher than the available supply,” said Thomas Schroeter, managing director of ImmoScout24.

“Due to the rise in interest rates, demand has shifted from buying properties to renting. As a result, rent-seekers now face even more competition when looking for a flat.”

READ ALSO: How property prices are dropping in major German cities

Immoscout24 registered the highest demand for rental flats in Berlin, with a whopping 217 enquiries on average per flat advertisement per week. In Cologne, the demand was 78 enquiries per ad, and in Hamburg, the real estate site registered 68 enquiries per ad on average.

What will happen in future?

It doesn’t look like the situation will ease off this year. Experts predict that by the end of 2022 in Hamburg, for instance, the price increase for existing flats will be nine percent – the highest in Germany.

In Berlin, by the end of the year, rents for existing apartments are expected to rise by 5 percent overall, and in Cologne and Stuttgart, 6 percent. 

Vocabulary 

Existing apartments/flats – (die) Bestandswohnungen

Asking price – (der) Angebotspreis

New build/new construction – (der) Neubau

Basic rent or ‘cold rent’ – (die) Kaltmiete

Rent including other costs – (die) Warmmiete

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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