Top 10 European cities, where it is profitable to buy housing in 2022

oldypak lp

The main rule of real estate investment is to buy when the market falls, sell when it rises. Decreasing interest on deposits makes it unprofitable to put money in bank accounts, investing in real estate even during the pandemic looks more profitable.
Report by Oldypak LP statistics
If we look at the situation very briefly, we can note that the victory over the pandemic blitzkrieg has failed, now the war has turned into a positional war. The virus is throwing new strains into the fray, and European governments are sitting in the trenches. Communication between countries has become encrusted with a bunch of rules and conventions. So the restoration of the market to pre-doctored parameters, which almost all economists predicted back in the summer of 2021, will apparently be postponed again.

However, there is some good news. Even if it will not be possible to defeat the pandemic completely in the next year, the world will gradually learn to live in the new realities. Many business processes have already gone digital. Today, it is not so difficult to buy real estate almost anywhere in the world, using only a smartphone. All the stages, from object selection to transaction can be done remotely.

Another factor that has unexpectedly affected the prices on real estate market is the rising cost of metals and building materials. At the same time the cost per square meter has been creeping up, but there has not been any frantic growth on the real estate market – prices are still not allowed to increase due to low demand. Developers are forced to dump prices in order to attract customers, and many countries still offer a substantial discount for the purchase of real estate. Therefore, the first or second quarter of 2022 – not a bad time to make a long-held dream to buy real estate in Europe.

Real estate market review of Europe at the beginning of 2022

The situation when things are bad for everyone is good, because sooner or later things will go up. If there are funds, it is the best time to invest. However, even in the relatively small and densely populated old Europe, the situation is not the same everywhere. If some countries, thanks to old stocks or peculiarities of the economy, suffered less from the coronary crisis, a number of EU countries had a hard time at all. The closure of borders and the reduction of tourist traffic led to a near catastrophe. Cyprus and a number of small states, whose economy depends on filling up the beaches, are among them.

Let us note one more point – what is the purpose of purchasing real estate. If the ultimate goal is to move to the country, it is only important to buy a home with the maximum benefit when the market is still “lying”, if you are considering further resale or receipt of dividends from the use, it is better to choose a country with a rapidly growing economy, where there are prospects for rapid recovery of tourist flow (Croatia, Cyprus, Italy) or the business or educational centers of Europe (London, Berlin, Paris).

 

10 cities where it is profitable to buy real estate now

London

In London, home prices rose 5.3% for 2020, adjusted for inflation, even though it was perhaps the most dramatic year for the British economy – a sudden coronavirus and a planned but delayed Brexit.

Despite COVID-19 and Brexit, U.K. residential prices rose 5.56% in 2020, adjusted for inflation. The average price per 1 m2 of housing in the UK capital was €1,857. The market shows the best growth rates since 2013, which means – investing in the UK property market is much more profitable than placing funds on deposit in the bank.

Residential property prices in Britain are pushed up by the decline in construction sector activity. Only in 2020 the number of commissioned residential square meters decreased by 25%. This reduction provoked a rise in prices, even despite a significant (11%) decline in demand.

Rental yields in London due to the closing of the borders is at a very low level – 2.6%, and the cost of apartments is the highest in Europe – an average of 18057 euros per 1 m2.

Dublin

Despite the coronavirus, the Irish economy is showing steady growth – almost 3.4% in 2021 and, according to the European Commission’s economic growth forecast, 3.5% in 2022. This is supported by growth in consumption and exports and increased investment in the country’s economy. Given this, the purchase of real estate in Dublin looks a good investment.

Last year, property prices rose by 3.4%. At the same time, the number of people who want to buy a house in Dublin has decreased by 21%, and housing starts decreased by almost 2%.

Purchase housing in Dublin should be primarily for those who plan to make a profit from renting. Rental yields here are among the highest in the EU – 7.18%, and the cost per square meter is several times lower than in London – an average of only 2354 euros.

Berlin

Stability is the essence of Germany. Therefore, despite the fact that several coronavirus waves and periodic lockdowns have not passed without a trace for the economy of Germany, the demand for real estate here has not fallen even in the crisis 2020, due to the good performance of the economy, which is gradually recovering. During the year 2020 house prices in Germany rose by 11.42%. According to the German Federal Statistics Office, the number of permits issued for new construction rose by 4.8%.

All this is largely facilitated by government policies: subsidies for the purchase of housing and home improvement, low interest rates on mortgages, urbanization, good financial situation of companies and citizens.

Real estate in any city in Germany – a sound investment of finances. The average cost of apartments in Berlin is on average about 4991 euros per m2, and the yield from renting in Germany ranges from 2.9% to 3.7%.

Lisbon

Lisbon is the westernmost and most ancient city in Europe. The ancient Celts erected dolmens in this place, and even earlier there was a major Phoenician port. Tourists drive themselves to see the Baixa Quarter or the Park of Nations. Taste Portuguese cuisine, visit national holidays and festivals. It is quite cozy and relatively small among European capitals. It is home to just over a million people.

The country is considered quite cheap. Economic growth has been somewhat slowed by the pandemic, with Eurostat predicting economic growth of 5.4% in 2022, one of the highest in the EU.

Construction activity, like almost all of Europe, has slowed here in 2020. The market has not yet fully recovered, nor has it reached the levels of 2019, when there was a construction boom and property prices rose by an average of 11.2 percent, and the number of building permits issued rose by 18.4 percent. Last year, real estate prices rose “only” 6.2 percent, which is also not bad in today’s realities.

Among other things, in the country has a fairly popular among foreign investors passport program, which contributes to a continued interest in buying a home.

The yield from rents in Portugal – 5,45%, and the average cost in Lisbon – 3830 euros per 1 m2.

Barcelona

In 2021 Spain was among the most popular destinations among Russian investors. It attracts foreign buyers favorable climate throughout the year, a wide opportunity for a beach holiday, many cultural and historical sights and comfortable conditions for living. The most attractive Barcelona – beautiful, charming, spectacular and very unusual capital of Catalonia, the main autonomous region of the Kingdom of Spain, the cultural center, a place where they created the great Gaudi and Dali.

Construction activity, like almost all of Europe, has slowed down here in 2020. The market has not yet fully recovered, has not reached the levels of 2019, when the country experienced a construction boom and the prices of properties rose by an average of 11.2%, and the number of issued building permits increased by 18.4%. Last year, real estate prices rose “only” 6.2 percent, which is also not bad in today’s realities.

Among other things, in the country has a fairly popular among foreign investors passport program, which contributes to a continued interest in buying a home.

The yield from rents in Portugal – 5,45%, and the average cost in Lisbon – 3830 euros per 1 m2.

Barcelona

In 2021 Spain was among the most popular destinations among Russian investors. It attracts foreign buyers favorable climate throughout the year, a wide opportunity for a beach holiday, many cultural and historical sights and comfortable conditions for living. The most attractive Barcelona – beautiful, charming, spectacular and very unusual capital of Catalonia, the main autonomous region of the Kingdom of Spain, the cultural center, the place where they created the great Gaudi and Dali.

The average cost of housing in Rome is 2848 euros per 1 m2, and the yield from rents reaches 4.5%.

Paris

It is difficult to imagine events in which the possession of real estate in Paris will become unprofitable. During the pandemic, investor interest in buying French real estate did not weaken, despite the lockdown and closed borders. At the same time, a slight decline in demand, with a significant drop in supply during the pandemic, affected the growth of prices. Over the past year housing in France rose in price by 4% to 2807 euros per 1 m2.

In Paris, last year the price of residential real estate rose by 3.4%, with an increase in the number of properties rented by 9%. At the beginning of the year the cost of housing in Paris averaged 10535 euros per 1 m2, and the yield from the lease reaches 6%.

At the beginning of last year, demand for housing in France began to grow again and added 14% by mid-2021. Due to this it is possible to predict the growth of real estate prices in the coming year.

Low mortgage rates and relaxed credit rules have helped maintain the demand on the French residential real estate market.

Amsterdam

The Netherlands remains one of the most promising countries for investment in real estate even in the pandemic due to consistently high demand, which outstrips supply. Here we recorded one of the highest property price growth in Europe – 7.33%.

According to oldypak capital lp property 2022 report, the country’s market has reacted to the Coronas crisis paradoxically. The number of transactions last year rose by 7.7%, while in 2019 growth in this position was almost zero.

The cost of apartments in Amsterdam – 6900 euros per 1 m2, the yield from renting reaches 6.4%.

At the beginning of last year, demand for housing in France began to grow again and added 14% by mid-2021. In this regard, we can predict an increase in real estate prices in the coming year.

Low mortgage rates and relaxed credit rules have helped maintain the demand on the French residential real estate market.

Amsterdam

The Netherlands remains one of the most promising countries for investment in real estate even in the pandemic due to consistently high demand, which outstrips supply. Here we recorded one of the highest property price growth in Europe – 7.33%.

According to oldypak capital lp property 2022 report, the country’s market has reacted to the Coronas crisis paradoxically. The number of transactions last year rose by 7.7%, while in 2019 growth in this position was almost zero.

The cost of apartments in Amsterdam – 6900 euros per 1 m2, the yield from renting reaches 6.4%.

At the beginning of last year, demand for housing in France began to grow again and added 14% by mid-2021. In this regard, we can predict an increase in real estate prices in the coming year.

Low mortgage rates and relaxed credit rules have helped maintain the demand on the French residential real estate market.

Amsterdam

The Netherlands remains one of the most promising countries for investment in real estate even in the pandemic due to consistently high demand, which outstrips supply. Here we recorded one of the highest property price growth in Europe – 7.33%.

According to CBS (Netherlands Statistics Agency), the country’s market has reacted to the Coronas crisis paradoxically. The number of transactions last year rose by 7.7%, while in 2019 growth in this position was almost zero. The cost of apartments in Amsterdam – 6900 euros per 1 m2, the yield from renting reaches 6.4%. The yield from the lease of real estate in Slovakia is estimated at 4.53%, and the average cost of housing in Bratislava – 2,911 euros per 1 m2. Decline in property prices in the near future in this city is highly unlikely. The level of housing affordability is moderately deteriorating. The main reason will be a slowdown in wage growth, while real estate prices continue to grow at a steady pace. Demand for residential real estate has been and will continue to be supported by very low mortgage interest rates and overcrowding in the existing housing stock. The price situation will largely depend on the secondary residential real estate market, i.e. the degree to which current owners are willing to sell their properties.

And what about Cyprus?

Despite the pandemic, the residential real estate market in Cyprus in 2021 showed the highest rates over the past 10 years. Compared with 2008, the cost per square meter of apartments and houses in Cyprus has grown by more than 85%.

The year 2021 showed that the Cypriot property is in steady demand. The most unfavorable of recent years is 2020, when demand was hit simultaneously by pandemic, reduction of tourist flow and volume of construction. In addition, one of the most painful blows to the sector was the abolition of the passport program. Over the past year, however, rates have come close to what they were before the pandemic. Prices for new buildings only in the process of construction increases by more than 20%. According to analysts, the situation favorably affected by low mortgage rates, government subsidies to certain categories of Cypriots, the restart of tourism, and adaptation of existing immigration programs to modern requirements. Improvement of the situation in real estate is projected and in 2022, unless of course there is a new force majeure.

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