With the end of 2022 just days away, marked by inflation and ever-increasing interest rates, 2023 is being touted as a new year for a clean slate. For this reason, today we present 5 real estate trends for 2023 that we hope will be different from the year we are about to end.
The first thing is to understand what are the economic predictions of such important organizations as the IMF, and the ECB (European Central Bank).
These institutions indicate that the real estate market in 2023 will be marked by a slowdown in the economy, as well as the effects of the latest increase in interest rates that have broken records this year.
Interest Rates Will Rise in 2023, But Not Too Much
At this point, it is difficult to say exactly how much interest rates will rise in the near term. Estimates indicate that 2023 will be a year of slightly higher rates.
According to data from the European Central Bank, the estimated CPI for 2023 will be 5.5% and for 2024 it will fall to 2.3%.
Considering that the CPI was 6.8% last November, the figures for 2023 are not bad at all.
This will of course depend to a large extent on what happens with Russia and the war in Ukraine driving up inflation.
Still, the attempts by Europe and the U.S. to stop inflation are working, yes, the decline is taking longer than expected.
One of the effects of these rising prices is that the government has had to take action in the form of mortgage subsidies for 2022.
These subsidies and premiums are intended for the most vulnerable families. It is estimated that they affect more than one million households that are vulnerable or at risk of becoming vulnerable. What is almost certain is that interest rates will likely be higher in 2023. As the economy grows and inflation and therefore CPI falls, the ECB will likely tend to lower interest rates.
In fact, ECB President Christine Lagarde recently indicated that it is not her intention to continue to raise interest rates and return to past levels as long as economic circumstances permit.
Whether such an increase is desirable or detrimental will depend on current economic circumstances. Ultimately, the estimate of the interest rate increase for 2023 is uncertain, but it can be assumed that rates will be slightly higher than today.
Housing Price Adjustment for 2023
Almost always, the housing sector has become a safe bet and a valuable asset to invest in. This does not mean that the price of apartments will be slightly affected in the coming years.
The real estate sector is affected by different factors. One of them is the progress of the economy.
Taking into account that somr countries in Europe that has been least affected by inflation, it is not surprising that housing will continue to do well until 2023.
If the economy and unemployment rate continue to decline, it is almost certain that housing prices will continue to rise slightly in the coming years.
In the worst case scenario, home and square footage values will hold steady, at least in major cities.
By 2023, some analysts say that the real estate sector will partially recover by 2023 and return to its starting level by 2022.
Of course, it remains to be seen how the market and the economy, which are closely linked to each other, react.
More Rentals and Fewer Purchases
We don’t want to alarm anyone, but the data confirms it, the number of persons who bet on renting in Europe increases every year.
This case is particularly striking among young owners. Not surprisingly, the number of owners under 40 years old is half of what it was 10 years ago.
This does not mean that our country remains a country of homeowners, which it is, but less and less. The truth is that people prefer “leasing”, and most of them are young people who cannot afford to buy.
Sustainable and Responsible Investments
Society is becoming increasingly sustainable and responsible. This is evidenced by the fact that citizens are increasingly concerned about the environment.
Housing is no stranger to the sustainability trend. Indeed, the number of investors who are betting and realizing architectural projects based on environmentally friendly materials and strategies is increasing more and more.
In the real estate sector, this means more investment in projects that improve the local business environment, sustainable buildings that minimize energy use and waste. The same goes for projects designed to be pollution-free and have as small a carbon footprint as possible.
At the same time, homeowners’ tastes have also changed, especially since the pandemic, and they prefer spacious, open, modern and sustainable homes and apartments.
The Market for Second-Hand Homes Will Increase
According to recent forecasts, the second-hand housing market is expected to grow significantly in the coming years.
In fact, experts estimate that the market will grow by 20% between 2019 and 2023.
In general, this growth in second-hand housing market is not bad news for landlords who are committed to buying and renovating an apartment for rent or sale.
With more people looking to rent, it is not surprising that there are more offers to buy homes in the second-hand market.
Conclusions on Real Estate Trends in 2023
The past few years have shown that the real estate industry is solving its long-term problems. With the trends described above, we expect 2023 to be a promising year for the real estate industry.