In early 2022, Europe’s economies began to bounce back from a two-year turmoil of corona virus lockdowns. Worldwide stock markets along with crypto currencies and properties, reached new heights and inflation rose significantly. A year later, supply chain disruptions due to coronavirus have lessened, however inflationary pressure continues to increase at a pick rate of 10%, as huge amounts of cash were injected into the economy during the pandemic. All these were made worse due to the war in Ukraine and the shifting of energy supplies at substantially higher prices. Increasing interest rates in an attempt to battle inflation is expected to result in a repricing of all asset markets, including real estate. This trend is expected to get a foothold within 2023 as alternative investments become more attractive than property due to higher risk-free rates.
The direction of the real estate market will be determined by the interaction of factors affecting property prices positively, such as population growth, rental increase and inelastic supply, versus the factors which affect property prices negatively, such as higher interest rates, higher construction costs and less disposable income.
