In 2021, real estate investors across the world enjoyed a wild ride. Low-interest rates boosted demand. The shortages of labour and raw materials made inventory scarce. These factors combined to create the perfect storm of over-inflated property values and intense bidding wars in the global real estate market.
According to property consultancy firm Knight Frank, 2022 will be the year of cross-border real estate investments. Where are global real estate investors moving their money? The European Union. The real estate markets in EU countries like Germany, Austria, and Belgium are set to offer great investment opportunities for foreign investors in 2022 and beyond.
Each European real estate market is different. The average cost-per-square-meter of housing, annual tax rates, and additional investment costs vary in different European markets. Here’s an in-depth guide to buying real estate in the best markets inside the European Union –
Housing prices in Hungary dropped by 7.5% in 2020 due to the COVID19 pandemic. However, the Hungarian housing market’s recovery in 2021 was phenomenal. As the economy restarted, housing prices increased by 13.3% in Q2 of 2021. In Budapest, housing prices increased by 9.1%.
This strong comeback has restored the faith of global real estate investors in the Hungarian housing market. Real estate investments in the country are very popular among foreign investors from China, Israel, and Russia. Here are some key details about the Hungarian housing market –
- The average cost-per-square-meter of housing in Hungary is €2,515. Average housing prices are the highest in the historical city of Budapest (approximately €4,000 per square meter).
- Property taxes in Hungary are relatively low. Buyers can expect to pay anywhere between 4% to 10% of the total cost of housing in taxes and fees.
- Maintaining housing properties in Hungary is relatively cheap. Investors only need to pay approximately €250 per month for maintenance services.
- There is no yearly property tax in Hungary.
These factors (especially the last one) make the Hungarian housing market extremely appealing to foreign investors.
Real estate prices in Germany have constantly been rising since 2020 (11.5% increase in average housing prices). The low-interest rates on home loans are driving the local demand for housing. Foreign investors are also targeting residential properties in major cities like Berlin and Hamburg.
In 2021, the average cost-per-square-meter of housing in major German cities was approximately €5,200. That’s expensive compared to other EU markets. But, cities like Berlin, Frankfurt, and Munich have tremendous potential for growth.
Investors can also target less expensive housing in Dresden, Dortmund, and other small cities where the average cost-per-square-meter of housing is less than €3,000.
Buyers can expect to pay anywhere between 7.2% to 12.8% of the total cost of housing in taxes and fees. Homeowners are also required to pay annual real estate taxes, which are calculated from the assessed values of the properties.
Maintenance of real estate properties in Germany is expensive – one of the most expensive in the EU.
Investing in the German housing market will cost you. But, it’s Europe’s largest economy and home to a highly skilled lab or force. Investors can’t find these qualities in other EU markets. That’s why, despite the high entry costs, the German housing market is very promising.
Foreigners with residence permits can easily buy housing in Austria. That’s what makes the Austrian housing market so appealing to foreign investors. Participate in the country’s residence permit program and start investing with no regulatory hassles. Of course, foreign investors without residence permit programs can also invest. But, it’s more complicated for them.
- In Q1 of 2021, the average housing prices in Austria increased by 3% – a promising sign for investors.
- The highest cost-per-square-meter of Austrian housing is in Vienna. Here, housing prices range from €4,000 in the suburbs to €12,500 in the city centres.
- Buyers can expect to pay anywhere between 7.6% to 10.6% of the total cost of housing in taxes and fees.
- Maintenance costs of real estate in Austria are similar to those in Germany.
These housing markets in the EU are attracting the most global attention. They all have high growth prospects and interesting futures.