No one can say what the future holds for us. No one, except S&P. According to them forecast rating agency, real estate in European Union countries will demonstrate moderate growth in the next three years. Southern Europe, in particular, stands out as a region with the most promising indicators. Countries here are able to maintain their positions thanks to a combination of macroeconomic factors and real estate price stabilization. Shall we consider this topic in more detail?
Moderate price growth in EU countries: myth or reality
S&P analysts have published their forecasts regarding real estate prices in the EU. According to their estimates, by 2027, most European real estate markets will enter a phase of stabilization and moderate price growth. The reason for such optimism is the stabilization of prices that began as early as the end of 2023, as well as the gradual recovery of lending and improvement in the labor market situation in EU countries. S&P predicts that real estate investment volumes will begin to recover after 2025. This is due to the expected decrease in inflation and interest rates. The process will happen quite slowly, but it will mark the beginning of a new era for square meter buyers.
The rating agency S&P raised its previous forecasts for most European countries. Thus, in 2024, the highest growth in real estate prices is expected in:
- 🇮🇪 Ireland - +5.8%;
- 🇪🇸 Spain - +4.0%;
- 🇵🇹 Portugal - +3.5%.
These countries demonstrate a confident dynamics thanks to the revival of the economy and the reduction of inflation risks.
At the same time, "tourist favorites" can expect a moderate decrease in real estate prices in 2024.
- 🇮🇹 Italy -3.7%;
- 🇫🇷 France - -3.5%;
- 🇩🇪 Germany - -0.1%
Let these data not upset you, as starting from 2025, an increase in prices is predicted in all countries of the European Union, including market outsiders. By the end of 2025 (maximum, 2027, as S&P says), the growth will range from 1% to 2.9%. Earlier, representatives of the rating agency stated that no improvements in the situation should be expected until the end of 2026.
Not only S&P recognizes the signs of a bright future. The GPG report also states that real estate prices rose in 16 out of 27 European countries (on an annual basis at the end of the first quarter of 2024). The most significant growth was recorded in Montenegro (+24%). Although this country is not part of the EU, it is attracting more and more foreign investors, which in turn gives a strong boost to the market newly built buildings. Despite the current fluctuations in the market, experts unanimously forecast a gradual recovery of the European real estate market in the coming years. This trend is expected to be particularly strong in the southern countries of the European Union. All we can do now is wait for the new year and compare the forecasts with reality.