After several years of growth across all real estate segments, 2020 was anticipated to maintain this trend. Unfortunately, the Covid-19 pandemic put an end to these aspirations.
However, despite an economic crisis and restrictive measures imposed by governments, the real estate market in Europe is still considered to be the most attractive property investment region in the world.
Many countries saw interesting circumstantial changes, especially in the major cities. For example, apartments in Prague, Budapest, and Rome, which would have normally been rented by tourists, were placed on the long-term rental market, increasing the supply of housing and leading to a decrease in rent. Despite the impact of Covid-19, recent market trends arising from a number of countries indicate that there is room for growth.
The French residential property market has been on a positive curve since 2016 and the country is also witnessing an increase in the number of homes being built, which is expected to continue at 3.6% up to 2022 and beyond.
Germany is one of the few countries where property has somewhat escaped the effects of the Covid-19 pandemic and prices are continuing to rise. In fact, according to Deutsche Bank, prices on existing homes have risen by 123.7% on average in the seven major cities over the last ten years. However, this has priced many young people out of the market, particularly in Berlin, where the population has rapidly increased and there are not enough units to keep up with demand.
Looking over to the eastern side of Central Europe, the Czech Republic has a rapidly developing real estate market even with lockdowns. Prior to Covid-19 restrictions, transactions and prices of residential properties were increasing year-on-year for the majority of the regions of the country. Led by rising prices of apartments in Prague and Brno, the national sales price of housing increased by 15.4% in 2019. Furthermore, after the initial lockdown caused by Covid-19, the residential real estate market made a significant recovery in the third quarter of 2020, with the average selling prices of Czech apartments increasing by 4.9%.
These three countries offer the best representation of real estate growth in Europe, due to both existing infrastructure and positive emerging trends. Germany has seen increased housing prices over the last decade and a large demand for affordable housing will buoy the market for years to come. With its low-interest-rate policy and high demand for properties in the major cities, France remains a solid option for investment in 2021. Lastly, the Czech Republic has quietly become a burgeoning force in the European real estate market. High rental yields, which are comparable with some of the bigger European economies, make the country an attractive proposition.