Property Index - Overview of European Residential Markets

The "Property Index" is an annual publication by Deloitte that reviews residential real estate trends across Europe, Israel, and Turkey. This 14th edition provides comprehensive insights into housing markets, focusing on factors influencing these markets and their unique regional characteristics. The authors are experienced professionals from Deloitte's real estate advisory and financial advisory sectors, contributing expertise in development, investment, and finance.

This edition highlights the evolving landscape of residential property markets amid economic uncertainties. The report showcases that housing markets are beginning to stabilize after a period of rapid price increases driven by pandemic recovery. Notably, inflation, interest rates, and government policies have significantly influenced housing dynamics. The publication includes data from 28 countries and emphasizes that while national trends are informative, local market conditions reveal more about affordability, availability, and quality of life.

New data indicates that housing development intensity varies widely across Europe. Turkey leads with 6.85 completed dwellings per 1,000 people, while Bosnia and Herzegovina, Hungary, and Spain lag behind with fewer than two completed dwellings per 1,000. This disparity underscores the varying rates of construction activity aimed at meeting housing demands.

Luxembourg is identified as the most expensive country for new residential properties, averaging €8,760 per square meter, followed closely by Israel at €6,131/sqm. Conversely, Turkey remains the most affordable market, with prices at just €949/sqm. Notably, cities like Amsterdam require 15.4 gross annual salaries to afford a 70 sqm home, making it the least affordable city surveyed.

The rental market is also highlighted, showing that Luxembourg City has the highest rental prices at €43.4 per square meter, followed by Paris and Dublin. Many urban areas are experiencing upward pressure on rents, primarily due to increased demand and limited supply of affordable housing. The report indicates that rental prices are rising significantly, particularly in cities with growing populations and economic activity, while some regions are seeing a decline due to oversupply.

The mortgage landscape is characterized by high interest rates, with Hungary recording the highest average at 9.35%. In contrast, Bulgaria offers the lowest rates at 2.83%. The report notes that borrowing conditions have tightened, impacting affordability for many potential buyers. While some countries experienced declines in interest rates, the majority of nations observed rising costs, which could hinder market recovery.

This edition emphasizes the increasing importance of sustainability in housing. More properties are being designed with energy-efficient features, and there is a growing demand for homes that meet environmental standards. The report highlights that innovative solutions, such as modular construction and energy-efficient designs, are becoming more common as the industry adapts to rising costs and environmental goals.

Deloitte's Property Index serves as a vital resource for understanding the complex and evolving residential property markets across Europe. By providing data-driven insights, the report fosters informed discussions about the future of housing, particularly in the context of sustainability and economic challenges facing the region.