Emerging Trends in European Real Estate: 7 Key Takeaways for 2022
In this article, we will look at the key trends that will shape the European real estate market in 2022. Things change all the time in real estate, but the current trends such as the larger economic and global factors are accelerating change at an advanced rate. Let’s take a look at what all of this means.
Trend #1 – COVID Restrictions Have Ended
In the midst of the global pandemic and various lockdowns throughout Europe, things were looking potentially quite tough for the real estate market. Investors became less interested in buying property, finance was much more difficult to come by and many construction sites downed tools. The result was a near 15% drop in housing investment during the first wave of the pandemic.
Equally, fewer people were buying property for themselves and their families as well (with the exception, of course, of medium to high income families who were saving money due to COVID restrictions).
As COVID rates improved, thanks to mass vaccination programmes, economic activity did start to improve. Many countries put financial support measures in place, giving investors and prospective buyers some confidence to buy once more.
Aside from this, what could happen in the future is that interest rates could rise even further, while various financial incentives brought on by COVID could start to wind down. There’s also the possibility of a two-way shift between buying in the countryside or in larger cities.
If working from home becomes the ‘new normal’, more and more of us will seek suburban and rural living. But equally, as more companies encourage their staff to get back to the office, some of us might be keen to return to the city. The long-term results of this are still to be seen.
Trend #2 – Online Has Taken Off
At the height of the COVID-19 pandemic, many of us turned to online shopping to avoid the crowds and keep safe. This goes for real estate too! Agents had to introduce new measures to reduce contact between clients and their staff, and digital solutions have been central to being able to achieve this.
In many cases, customers have opted to complete a virtual tour of a property, perhaps as a way of previewing it, before committing to an actual appointment. Equally, VR tech has also played its part.
This kind of technology appears to have advantages for both the agent and the seller. For the agent, it streamlines processes and minimises the number of staff needed. It also keeps staff safe and saves time.
For the customer, technology has enabled them to make better choices when it comes to buying a home. For example, drone footage and high-quality imagery on an online listing can act as a screening process before actually going to see a property.
With this in mind, it’s no surprise that 64% of consumers make a purchase after watching branded social videos.
Trend #3 – Instability Is Here To Stay
There are many different reasons why the European real estate market may be changing this year. Perhaps one of the major ones at the moment is the war in Ukraine. For Brits, this has pushed up energy bills to eye watering levels, and this is due to the supply of gas coming out of Russia through Ukraine being disrupted.
Petrol and diesel prices have also hiked. Russia is the world's second biggest oil producer, and with the current state of affairs, oil has become more difficult to trade. The result for Spain is their highest prices ever – and many other European countries are seeing the same hikes.
When we talk about instability, we’re not just talking about fuel either. The economy may also play its part. The base rate set by the Bank of England may rise, inflation might go up in general, and loans and mortgages could become pricier as a result.
Trend #4 – Low Supply Is Driving Price Growth
Housing within the EU is expensive at the moment because there is a general lack of adequate and affordable housing. In fact, 90% of cities worldwide are currently not supplying this, according to the World Economic Forum.
The result of this is that house prices are increasing, and this rate of growth is surpassing the increase in rents. This is despite two thirds of the EU population actually owning their own home.
Subsequently, it is clear that policymakers do need to start making the provision of affordable and adequate housing a priority.
Trend #5 – Do You Speak Digital?
Language has made many changes over time from the advent of the printing press to the rise of the online world dropping. The amount of information available is rapidly increasing. The language of the future is…
To speak visually is to express yourself without words. And real estate is seeing the use of words drop more and more. In the recent past, descriptions of a property were an everyday thing. You had to write a description of a property that brought it to life.
But people don’t generally stop and read for that long. Visuals have taken over, giving life online to a property in a way that the written word just cannot match.
Trend #6 – Interest Rates Predicted To Rise
Economists predict that the interest rise will continue in 2023/2024. The reality of this becomes even more clear when we look at the rise in interest rates given by the European Central bank just after COVID.
Alongside this, it’s expected there will also be a slowdown in economic growth and a sharp rise in inflation. On the upside, things are looking a bit more promising for Germany, France and Italy, which happen to be the three biggest economies in the Eurozone.
However, when you look at recent events such as rises in energy prices and businesses struggling with supply chain problems, it’s not entirely clear what will happen.
Trend #7 – Diverse Investment Opportunities Might Affect Property
There are many clear advantages of investing in real estate. So much so, that it is perhaps the number one way that most investors make money. However, many people are realising that real estate isn’t the only valid way of making money.
Investments such as cryptocurrencies are becoming more and more popular because of their many advantages over real estate. You don’t need loads of cash to invest, it’s possible to build your investment slowly over time and it’s easier to enter into than property.
But perhaps one of the best things about cryptos compared to real estate is that they can be sold quickly, allowing a fast release of cash. Unfortunately, this tends not to be the case when selling certain kinds of property.
Investing in crypto also allows investors to avoid some of the pitfalls of buying property. No cash is wasted on having to get property into a sellable condition, and investors don’t have to pay out regardless of whether they have a tenant in place or not.
Ultimately, real estate agents will need to up their game if they want to compete with other kinds of investments and one way this can be done is by using visuals, which can also help investors stand out in a hyper competitive market.