Global real estate prices are anticipated to rise steeply in the coming decade, with an average increase of 9% annually, according to the latest findings of the Economic Experts Survey (EES). The survey, conducted quarterly by the ifo Institute and the Swiss Economic Policy Institute, predicts increases of 8.4% in the UK, 6.0% in the US, and 5.5% in France.
“The increase in real estate prices is being driven more by factors of demand rather than supply,” says ifo researcher Timo Wochner. Among the surveyed, 37% cited higher living standards, rising incomes, population growth, and the desire for more living space as the main factors behind the expected price hikes.
The trend toward remote work also contributes to the growing demand for real estate. “According to 27% of the experts, supply factors such as limited production capacity, higher prices for construction materials, and a lack of building lots are responsible for rising real estate prices,” Wochner added.
Western Europe (6.4%) and North America (7.7%) are expected to see below-average price increases. In contrast, significantly higher growth rates are anticipated in Southern Europe (18.4%), Eastern Europe (14.9%), South Asia (25.1%), West Asia (22.4%), and Central America (24.4%).
The survey’s results also reveal a strong correlation between regional inflation predictions and experts’ real estate price expectations. “The actual growth rates will be lower,” says ifo researcher Philipp Heil. “In the UK, house prices have gone up by more than 67% over the past ten years, and this trend is likely to continue.” That figure is 112% in the US and 25% in France.
Monetary policy, inflation, and governmental policy were named by 12% of respondents as additional drivers of real estate price increases.
The survey gathered insights from a total of 1,405 economic experts across 133 countries, running from June 14th to July 2nd, 2023.
