Economic experts are forecasting a sharp upward trajectory for real estate prices across the globe in the coming years, with an average annual increase of 9 percent, according to the latest Economic Experts Survey (EES) conducted by the ifo Institute and the Swiss Economic Policy Institute. Factors such as growing demand, higher living standards, population growth, and changing work patterns are driving this surge, with specific regions projected to witness even more substantial growth rates.
In the dynamic real estate market, a combination of factors is contributing to the notable rise in prices. Among them, 37 percent of respondents pointed to increased demand stemming from improved living standards, rising incomes, population growth, and the desire for more living space. The ongoing shift towards remote work is also a significant influencer of demand.
Meanwhile, 27 percent of experts highlighted supply-related factors such as limited production capacity, escalating construction material prices, and a shortage of available building lots as contributing to the surging real estate prices. Monetary policies, inflation, and government initiatives were identified by 12 percent of respondents as further drivers behind the price hikes.
Regionally, varying growth rates are anticipated. Western Europe and North America are expected to experience real estate price increases below the global average, with projections of 6.4 percent and 7.7 percent, respectively. On the other hand, Southern Europe and Eastern Europe are set to witness significantly higher growth rates at 18.4 percent and 14.9 percent, respectively.
Remarkably high real estate price increases are anticipated in South Asia (25.1 percent), West Asia (22.4 percent), and Central America (24.4 percent). However, it is crucial to note that the figures provided are nominal growth rates, and actual growth rates are expected to be lower.
Looking at historical trends, the researchers expect that the real estate price growth rates will be lower than the projected figures. For instance, in the UK, house prices have already risen by more than 67 percent over the past decade, with a similar trend likely to continue. Similarly, in the US, the figure stands at 112 percent, and in France, it is 25 percent.
The comprehensive survey received insights from 1,405 economic experts representing 133 countries. The data was collected between June 14 and July 2, 2023.
With soaring demand, evolving work patterns, and changing economic landscapes, the global real estate market is entering an era of remarkable transformation. As these predictions materialize, it will be vital for policymakers, investors, and prospective buyers to navigate the evolving market dynamics skillfully and adapt to the changing realities of the real estate landscape.
HT
