As the region with the lowest real estate prices on the continent, Southeast Europe emerges, according to a recent Deloitte report.
However, despite the affordability of these homes compared to the rest of Europe, it is still a financial challenge for many local citizens to buy their own home.
Of all the countries assessed in the report, Bosnia and Herzegovina recorded the lowest average transaction price for new homes at €1,315 per square meter, followed by Greece and Romania at €1,463 and €1,504 per square meter respectively.
In 2023, Israel was again the most expensive country for real estate, with an average transaction price of €5,439 per square meter. Austria maintained its position as the second most expensive market, with average prices reaching €4,920 per square meter.
Germany was not far behind, with properties selling for an average of €4,700 per square metre.
The new purchases and sales
Hungary experienced the largest price increase compared to 2022, with prices of new home sales increasing by 13.3%. Poland and Portugal also saw significant increases, with prices rising by 12.2% and 11.5% respectively.
In terms of capital cities, Budapest led the way with an 11.2% rise in transaction prices. Warsaw followed with a 9.7% jump, while Oslo, Belgrade and Prague saw more modest increases of 7.2%, 2.9% and 1.8% respectively.
Cheap but… inaccessible roof
Deloitte assesses affordability by looking at how much gross annual wages are needed to buy a new home. In this regard, the Czech Republic is the least affordable country in Europe, with the average citizen needing to invest the equivalent of 13.3 annual salaries to buy a new home.
Neighboring Slovakia is no longer the most demanding country to buy an average new home. In 2023, Slovak citizens had to spend 12.7 times their average gross annual salary to afford a typical new home, a decrease of 1.4 salaries compared to the previous year.
Then Israel, Ireland and Hungary require an average of 10.2 gross annual salaries to buy a new home.
While Bosnia is among the most affordable countries in terms of price per square meter, citizens still need between six and eight gross annual salaries to afford a new home.
In Serbia and Croatia, citizens need to save an equivalent of eight to ten gross annual salaries to afford a new apartment.
Homebuyers in Romania, on the other hand, only need to save the equivalent of between five and six gross annual salaries to be able to buy a new home. In Greece it takes 6.8 years…
The most affordable houses
The most affordable property is found in two of Europe’s most affluent countries, Norway and Denmark, where citizens need less than five gross annual salaries to buy their own home.
Interest rate rises across Europe in 2023 have made mortgages less affordable, particularly for first-time buyers. As central banks raised interest rates to fight inflation, borrowing costs rose.
“Given this, governments have launched initiatives to build more affordable units and regulate rental markets. Efforts are also exploring the use of innovative solutions for cheaper economic products, which will help reduce costs and speed up development, such as modular building techniques. Needless to say, this issue is embedded with overall socio-economic development as well as overall stability,” the report states.
“It therefore remains a priority for all policy makers as well as industry leaders to ensure that there is an adequate supply of affordable housing.”
While the report focuses mainly on property markets, it also points out that the rental market in South East Europe faces similar affordability challenges.
While rental prices are significantly lower than in Western European cities – such as London, where rents have soared to €33.8 per square meter – local incomes are often insufficient to comfortably cover costs.
Source: ot.gr
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