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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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The new innovations that could help solve Munich’s housing crisis

Bavaria's boom in popularity has made living in and around the metropolis of Munich extremely expensive. But some new design concepts may help ease the problem in the future.

The new innovations that could help solve Munich's housing crisis

The popularity of the Bavarian capital and its surrounding areas has resulted in an exorbitant housing market in recent years.

The latest survey by HWWI and Postbank Wohnatlas revealed that Munich is the most expensive city in Germany, with homes costing an average of €9,774 per square metre.

The high costs spill out into the surrounding areas of the city, too, with eight of Munich’s surrounding districts being in the top-ten most expensive areas outside of cities in Germany, according to the HWWI and Postbank Wohnatlas study.

READ ALSO: REVEALED: The German regions where property prices are falling and rising the most

But while the German government has failed to meet its own target of building 400,000 new houses a year to ease the housing crisis, localised initiatives are exploring new ways to provide more affordable living spaces.

A research project called “Einfach Bauen” (just build) by the Rosenheim University of Applied Sciences is currently testing out more efficient design principles on model houses in the municipality of Bad Aibling, around 60 kilometres southeast of Munich, to see if they can be used to create affordable housing. 

Head of the Project, Professor Anna Niemann, said that the scheme adopts a “back-to-basics approach”, with more simplified buildings, using technology to combine good indoor climate and energy efficiency.

As a result, the research has found that 3.1 metres is an ideal floor height for housing, as this allows for more efficient use of vertical space, ample natural light, and a favourable indoor climate. Such findings could help enable the construction of high-quality, affordable housing on smaller floor plans.

READ ALSO: Why Germany is seeing the ‘worst housing shortage in 20 years’

Finding a better way to use space is also a priority for Wolfgang Wittmann, Chairman of the Metropolitan Region Munich Association. He told Handelsblatt that in order to address Munich’s housing problem, it’s necessary to “design the functional space in a way that keeps the region competitive”.

His association believes that alternative office concepts also have a role to play in supporting a thriving metropolitan region. Coworking spaces, which have gained popularity in large cities in recent years, are now being explored as a potential solution. 

The Munich Metropolitan Region Association is currently working with coworking space provider 1000 Satellites to find out whether and which locations from Rosenheim to Ingolstadt are suitable for offering office units so that workers in less central areas would have a shorter commute to a working space outside of their homes. 

The aim is to establish coworking spaces in smaller communities surrounding Munich, which would not only cater to young self-employed workers but also to employees from companies which only have offices in the city centre.