Overview of Housing Prices in Europe for 2023
Austria continues to hold the title for the highest housing costs in Europe, with an average price of €4,920 per square meter in 2023. Following closely are Germany at €4,700 per square meter and France at €4,538 per square meter. However, it’s noteworthy that all three countries have experienced a decline in prices compared to 2022. In total, 15 out of the 24 countries examined have seen increases in average prices for new homes, with Hungary (+13.3%) and Poland (+12.2%) leading the way, while significant decreases were noted in Italy (-10.7%), Denmark (-3.8%), Norway (-3.5%), and the United Kingdom (-3.3%).
Housing Affordability in Romania
According to a recent statement from the company, the housing market in Romania has become more affordable compared to the previous year. In 2022, an average Romanian needed 6.3 years’ worth of gross annual salaries to purchase a new 70 square meter home. This figure dropped to 5.9 years in the past year, positioning Romania fourth in terms of affordability, behind Denmark (4.7 years), Norway (4.8 years), and Italy (5.3 years). The country with the lowest affordability among those analyzed is the Czech Republic, where 13.3 years of gross annual salaries are required to buy a new home, followed by Slovakia at 12.7 years. This calculation is based on the national average gross salary for 2023 (before taxes and deductions) over a 12-month period.
Market Influences and Future Prospects
The residential real estate market in Romania has been significantly influenced by high-interest rates in 2023, which have affected both developers, leading to increased construction costs, and buyers, who faced elevated prices and higher mortgage rates. However, signals from both the European Central Bank and the National Bank of Romania regarding the commencement of interest rate reductions, in light of decreasing inflationary pressures, could revitalize investments in the sector. Additionally, it is expected that positive economic growth forecasts and rising household incomes will further stimulate activity in the market moving forward, according to Irina Dimitriu, Partner at Reff & Asociații Deloitte Legal and leader of real estate consulting services at Deloitte Romania.
European Cities with the Highest Housing Prices
Paris remains at the top of the list for European cities with the highest housing costs, boasting an average price of €14,900 per square meter for new apartments. Munich follows with €10,900 per square meter, and the Inner Metropolitan Area of London comes in third at €8,018 per square meter. In Romania, the highest prices are found in Cluj-Napoca, where the average is €2,434 per square meter, reflecting a 3% increase from the previous year. Bucharest is in second place at €1,726 per square meter, followed by Brașov at €1,618 per square meter.
Trends in Rental Markets
On the rental market front, the Inner Metropolitan Area of London has climbed three spots to become the most expensive city in Europe for rentals, according to the analyzed data.
Real Estate Rental Trends in Europe: 2023 Overview
According to the latest findings from a Deloitte study, the city with the highest average rental price in Europe is currently Munich, where tenants pay approximately €33.8 per square meter each month. Following Munich, Dublin ranks second with an average rent of €31.5 per square meter, closely trailed by Paris at €31.3 per square meter. In contrast, the Greek city of Patra offers the lowest average rental rates at just €6.3 per square meter, with Bulgaria’s Burgas not far behind at €6.9 per square meter.
In Romania, Cluj-Napoca emerges as the most expensive city analyzed, with an average monthly rent of €9.7 per square meter, while Bucharest follows with an average rent of €9.2 per square meter. Both cities have seen an increase in rental prices compared to the previous year.
Market Influences and Future Projections
In 2023, the rental prices and housing market in Romania have been affected by a decline in residential property transactions, which have decreased by approximately 10% compared to last year. Additionally, there has been a slowdown in residential construction activities, dropping by nearly 6%. Marius Vasilescu, a Financial Advisory Partner at Deloitte Romania, emphasized the importance of revitalizing this market to increase supply. This is essential to meet the rising demand that is currently evident as well as projected for the medium to long term.
Deloitte Property Index Insights
The 13th edition of the Deloitte Property Index provides a comprehensive analysis of the residential real estate market in 2023 across 24 countries and 69 cities. To ensure comparability, all prices included in the analysis have been converted to euros.
Deloitte operates globally, offering audit, tax, legal consulting, advisory, financial consulting, and risk management services to nearly 90% of the companies listed in the Fortune Global 500, as well as thousands of private sector companies.
