RE/MAX Europe
The 2023 European Housing Trend Report highlights the impact of financial constraints on relocation, with over 30% of Europeans concerned about affordable housing options. Co-ownership is gaining traction, with 65% considering it as a viable option. The report notes a shift toward communal living, particularly among younger and older demographics. Despite economic challenges, residential real estate remains attractive, although a recession may dampen housing demand in the near future.
2023
Here is a summary of the key points from the European housing market reports:
Five Europeans (18.5%) have chosen to relocate due to financial constraints.
Looking ahead, just over 30% express concerns about future moves, fearing they won’t find affordable housing within their budget.
In the face of declining affordability, people are considering co-ownership.
Around two-thirds (65%) would consider co-owning a property with a group of unrelated people, such as friends, colleagues, or even strangers.
Nearly a quarter (24.8%) find allure in co-ownership for its cost-sharing benefits, surpassing those drawn to it for acquiring a second home (24.5%).
Co-ownership serves as a pathway to properties that might otherwise be financially out of reach (21.6%), while also providing a shared shield against the financial and legal risks associated with sole ownership (19.7%).
Michael Polzler, chief executive of RE/MAX Europe, said: “Europe’s evolving real estate landscape showcases the resilience and adaptability of its people and property market. Amidst the complexities of affordability, Europeans are moving towards fresh models of property ownership and communal living. This isn’t just about adapting to challenges; it’s about reshaping how and where we live.
“We’re committed to guiding our clients through this new terrain, ensuring that their housing aims align with their financial realities. The message is clear: despite challenges in the property market, Europeans remain committed to finding the right home that fits their needs and aspirations.”
Over half of Europeans (56.1%) could imagine living in a co-living space, which would offer them a private living space and shared access to other amenities.
But only if there is a variety of facilities available, as Europeans want cost-effective access to a good range of amenities, such as a shared workspace or games room (25.3%). They also see co-living as a way to reduce loneliness and isolation (21.2%).
While interest is currently highest among younger Europeans, who have always been more inclined towards communal living, elderly individuals are taking the idea of co-living seriously.
Almost half (49.4%) of over 35s would consider moving to a co-living space. Around four in 10 (40.4%) retired people would consider co-living. Companionship is a bigger motivator for older generations.
Overview
- The European housing market is at a turning point due to high inflation, rising interest rates, and economic uncertainty[1][3][7].
- House prices rose rapidly from 2020-2022 but are now expected to fall around 10-20% from peak levels[3][7][13].
- Residential property yields have risen around 100 basis points since mid-2022 as values decline[7].
- Housing affordability is a major challenge across Europe due to high prices and rising mortgage rates[2][3][7].
Demand and Supply
- Housing demand remains robust in many European cities due to population growth, urbanization, and undersupply[1][2][11].
- New housing construction has slowed across Europe, constrained by high costs, regulations, and reduced lending[1][7][13].
- Rental demand is strong, driving double-digit rental growth in some cities[7].
Investor Sentiment
- Investor sentiment has weakened due to economic uncertainty, but residential real estate remains attractive relative to other assets[3][7].
- Logistics and residential are the most favored property sectors currently[7][13].
- Alternative lenders and multifamily developers see opportunities amidst bank pullback[9][10].
Market Outlook
- A recession in 2023 seems likely, which will dampen housing demand and likely lead to further price declines[3][7][13].
- Sales activity is expected to remain subdued in the near-term[3][12].
- Pent-up demand and undersupply in many markets provide support and could drive a market recovery from 2024[7][13].
Policy Responses
- Many countries have introduced regulations to cap rents and support affordability[2][7][13].
- Governments are focused on increasing housing supply through planning reforms and incentives[7][13].
- Stricter lending rules have been implemented in some countries to contain risks[1][7].
Citations: [1] https://ppl-ai-file-upload.s3.amazonaws.com/web/direct-files/2111314/104f8ce1-6c9d-487d-bd4a-18b9c8687edf/European Housing Trend Report.pdf [2] https://www2.deloitte.com/content/dam/Deloitte/at/Documents/presse/at-deloitte-property-index-2023.pdf [3] https://www.remax.eu/en/blog/european-housing-trend-report-2023 [4] https://news.remax.com/remax-europe-report-key-insights-on-the-state-of-european-housing [5] https://www.abrdn.com/en-gb/institutional/insights-and-research/european-real-estate-market-outlook-q3-2023 [6] https://www.remax.eu/en/blog/press-releases-and-reports [7] https://www.pwc.com/gx/en/asset-management/emerging-trends-real-estate/assets/Emerging Trends in Real Estate Europe 2023 Report.pdf [8] https://www.linkedin.com/posts/remax-europe_reucon23-activity-7114959563203764224-4VOI [9] https://affiniuscapital.com/articles/uk-residential-update/ [10] https://www.linkedin.com/posts/remax-europe_remaxeurope-realestatetrends-coownership-activity-7122599607880024064-nQwM [11] https://www.linkedin.com/pulse/europe-real-estate-market-outlook-forecast-2023-2028-aadhya-kargeti [12] https://www.prnewswire.com/news-releases/remax-national-housing-report-for-june-2023-301880497.html [13] https://www.aew.com/research/how-much-further-to-go-in-down-cycle [14] https://www.instagram.com/p/CydX6XhMJXh/ [15] https://www.imf.org/en/Publications/WP/Issues/2023/03/24/European-Housing-Markets-at-a-Turning-Point-Risks-Household-and-Bank-Vulnerabilities-and-531349