According to the latest report of European Housing Review 2007-Royal Institute of Certified appraisers on residential real estate, which used data from national statistical offices, central banks, ministries of housing, as well as national associations of realtors, a number of European countries, showed unexpected results. It would seem, like a conservative market in Europe will continue to increase this year.
Key trends in the global European market, according to the realtors association, have become a double-digit price increase in most of the continent during 2006, and the increase in the number of mortgage loans. The highest growth rates are observed in the countries of Central and Eastern Europe (CEE), as well as in smaller countries - Greece, Ireland and the Scandinavian Peninsula. The smallest increase was demonstrated in the housing markets of Germany and Portugal.
OLD vs. NEW
It was expected that in the past 2006, the yield on the European market of residential real estate which reached its peak, will eventually decrease. Just as it happened on the other side of the Atlantic in the United States, where such circumstances helped curtail housing industry. Contrary to the American scenario, in most European countries, housing prices have continued to rise. Records include Iceland, where over the past year prices have risen by 30%, followed by Denmark, Norway and Spain (22%, 18% and 16% respectively). However, according to RICS, in the past year, the growth rate in real estate prices started to decline: Spain showed 5% drop in growth, while France and Finland, 3% drop and drop in 2% respectively.
Significantly, the highest growth in prices showed in small countries, particularly in Scandinavia. Analysts attributed it to high housing prices in the capitals of those countries and the inability of broad diversification in real estate prices due to the size of the land of those countries.
Down on the previous year is the growth in house prices in the CEE. For example, house prices in the Czech Republic rose only by 2% for the year, and even that is mainly contributed to the elite real estate sector. New leader in the market of the CEE is Poland, where housing prices in 2006 increased by an average of 33%. This is primarily caused by the housing shortage: according to PricewaterhouseCoopers, it is about 1.5 million apartments. In the capital of Poland, Warsaw, where more than half of the population is under 40 years old, the demographic boom expected in the 2010-2012. Last year 12,000 apartments were commissioned in Warsaw, which is by 20% lower than originally projected.
The main constraints of the housing market of Warsaw, estimated by PricewaterhouseCoopers, are the lack of a systematic approach to filling selected areas and the notorious human element. Another engine of the price growth of the Warsaw housing market is a growing demand from foreign investors, mainly from Britain, Ireland and Spain. As a result, housing has become the most attractive for investors. The yield of Warsaw developers is 25 -35% per annum. The average price of 1 sq. meter of housing in Warsaw, according to the Polish consulting company REAS, representing 6,200 zloty (1,636 euro), while the prices of popular high-rise condominiums in the city reached 10,000 zlotys (2638.5 euros) for one sq. meter.
The housing boom is expected in the countries that have become new EU members: Bulgaria and Romania. However, the investment boom in Bulgaria has never seized. According to the British analyst, in the first quarter of 2007 the prices of the Bulgarian residential real had increased by 10%. In Romania, the housing boom has only just begun. For example, it is estimated by www.reporter.ge portal, in the next 4-5 years the housing construction in Romania will be the fastest growing industry. According to the preliminary estimates, the investments in the real estate sector will be equal to 6 billion euros. Most investments in the Romanian real estate come from the residents of Spain and Israel, as well as the Romanians themselves. Thus, the Spanish group Fadesa Immobiliaria said that investing one billion euros in the construction of the housing complex on the outskirts of 12,000 apartments in Bucharest Stefanestii de Jos. In addition, Fadesa Immobiliaria will participate in the four projects housing units with a total capacity of 4,000 apartments and suites.
