What you bought, you bought: Long-term real estate price growth awaits

(Patria) - Economic experts predict a sharp upward trajectory for real estate prices worldwide in the coming years, with an average annual increase of 9 percent.

This is shown by the latest survey of economic experts (EES) conducted by the ifo Institute and the Swiss Institute for Economic Policy.

Numerous Factors

Factors such as growing demand, higher living standards, population growth, and changing work patterns are driving this surge, and certain regions are predicted to witness even more significant growth rates. In the dynamic real estate market, a combination of factors contributes to a noticeable increase in prices.

Among these, 37 percent of respondents highlighted increased demand stemming from improved living standards, income growth, population increase, and the desire for more living space. Remote work also significantly impacts demand.

Meanwhile, 27 percent of experts cited supply-related factors such as limited production capacities, rising construction material costs, and a lack of available building plots, contributing to the surge in real estate prices.

Monetary policy, inflation, and government initiatives were identified by 12 percent of respondents as additional drivers of price increases.

Different growth rates are expected regionally. 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 and Eastern Europe are expected to witness significantly higher growth rates of 18.4 percent and 14.9 percent, respectively.

Comprehensive Research

Extremely high real estate price increases are expected 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 mentioned are nominal growth rates, and real growth rates are expected to be lower, writes Stern, as reported by tportal.hr.

Looking at historical trends, researchers expect real estate price growth rates to be lower than projected.

For example, in the United Kingdom, house prices have already risen by more than 67 percent over the past decade, and a similar trend is likely to continue, economic experts estimate. Similarly, in the USA, this figure stands at 112 percent, and in France, at 25 percent.

A total of 1,405 economic experts from 133 countries participated in the comprehensive survey. Data was collected between June 14 and July 2, 2023.

With rising demand, evolving work patterns, and changing economic landscapes, the global real estate market is entering an era of exceptional transformation.

"As these predictions materialize, it will be vital for policymakers, investors, and potential buyers to skillfully navigate the evolving market dynamics and adapt to the changing realities of the real estate landscape," the research findings emphasize.