Dramatic market turnaround will become even more visible in 2023 - RE/MAX

Four major trends are expected to shape the European real estate market in the coming months, according to a new report published by brokerage firm RE/MAX.

These include a decrease in prices and demand for properties, sales sitting on the market for longer, a growing need for rentals, and a shift in buyer preferences towards smaller properties and less urban locations.

According to its newly released European Housing Insights Q1/2023 report, despite the challenges posed by the war in Ukraine, rising energy prices, increasing interest rates, growing construction costs, and environmental pressures  – the market remains robust although volatile, with demand for rentals continuing to grow, and increasing opportunities for buyers who are able to adapt.

The survey insights reveal that these challenges have affected different markets in different ways, with Germany seeing significant price falls and building permits decrease by 20%, while prices in Lisbon and Madrid continue to rise.

Interest rates are forecast to increase across the region, and therefore with some caution advisable, there is no reason for buyers to delay. With a limited supply of real estate properties, due to increased borrowing costs and construction delays, as well as listings being on the market for longer, there are great opportunities to be had - and the time to buy is now.

RE/MAX Europe’s market update is based on a survey conducted among the company's pan-European network of over 30,000 real estate professionals and on external market data.

The next phase of the real estate market cycle becomes visible
While the prices of residential properties in many regions of Europe have increased significantly in recent years, the report notes that the current market conditions, e.g. rising interest rates and a slowdown in the construction industry, make it unlikely that the market will continue to experience such rapid growth.

Michael Polzler, CEO of RE/MAX Europe, explained: 'We have entered a new phase, leading to affordability issues for some potential buyers.'

Polzler continued, 'In a volatile market, buyers and sellers must turn to real estate professionals with broad market insights and deep local knowledge for crucial guidance.'

For private builders, the general conditions have deteriorated, but the survey indicates this will likely have a limited short term impact on major construction activities due to the forward planning and project duration, although a it does identify a risk of capacity bottlenecks in refurbishment projects in the coming months.

Polzler: 'The European real estate market experienced an abrupt turnaround in 2022, and the consequences will become even more visible in 2023. The vulnerability of the housing construction supply chain exposed by the pandemic has led to a material shortage and sharp price escalation in building materials, combined with worsening financing conditions. This will significantly impact real estate construction development in the future.'


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