Rents balloon in Europe

About a month ago, we saw that real estate prices and rents across Europe had continued to maintain their upward momentum. As reported by Euronews, Europe's rental prices have increased by a staggering 18% in the past 10 years.  Estonia in particular recorded a rental price increase of 214%, as an influx of people to the country’s biggest cities, including Tallinn, pushed demand up while supply remained limited. The arrival of tens of thousands of Ukrainian refugees has exacerbated the situation further.

Going-There, a destination services company in the global mobility industry that provides rental tours and other support for those moving internationally has provided a summary of 7 locations that they work in (Ireland, UK, France, Germany, Spain, Poland, and Scandanavia) to provide a taste of the challenges in those rental markets. Other locations in the region with very high rent rises are Lithuania, Iceland, Finland, and Austria. 

As an example, here is what they say about Ireland, where rents have increased by 82% in the past 10 years:

Ireland
Ireland has one of Europe’s most competitive rental markets, with rentals at times attracting hundreds of applicants and long lines of viewers. The cost of temporary accommodation has also risen, as some hotels and short-term options are block-booked by the state to assist Ukrainian refugees. Although Ireland has ambitious plans to boost its housing stock, the market will remain stressed in the shorter term.

In Paris, the impending change to regulations related to property insulation due to new French climate rules, will prohibit landlords with the most poorly-insulated apartments and houses from making their properties available on the long-term rental market. Paris properties with a G energy rating – the worst achievable – will disappear from the rental market, with F-rated properties being banned from 2028 and E-rated rentals outlawed from 2034. There is already a lack of rental properties in Paris, with an article in the Financial Times detailing one renter’s experience: 340 applications for a single rental listing, with just 10 chosen to view the property. We anticipate that rents on properties will continue to rise then due to decrease in supply.

Amsterdam has been flagged up as a global city potentially on the edge of property market collapse. The city took 7th spot (up from 9th in 2021) in the UBS Global Real Estate Bubble Index. There has been building heat in the Amsterdam rental market for some months now, with anecdotal observations validated by new figures released by Statistics Netherlands (CBS) in September 2022. The organization found the largest recent increase in rental prices was observed in Amsterdam, where rents rose an average of 3.6% 

While almost all countries in Europe saw an increase in rent prices in the past decade, there were two exceptions: Greece and Cyprus. In Greece, rent decreased on average by 24% from 2010 until July 2022. In Cyprus during the same period, rental costs went down by 0.2%. 

Much like in the U.S. and many other countries, the problem for renters is that the cost to buy a home went up even more in most of these same locations. While we said that rents increased by 18%, house prices increased by 48%. Per the data from ec.europa.eu/eurostat, "In Hungary, the cost of buying a home grew by 168 per cent, in Luxembourg by 135 per cent, in Latvia by 131 per cent, in Lithuania and Czechia by 130 per cent and in Austria by 121 per cent."

House prices more than doubled in Estonia, Hungary, Luxembourg, Latvia, Lithuania, Czechia and Austria.

Since most travel restrictions have been lifted, demand for rental properties has been rising fast, resulting in an overstrained rental market. For global mobility programs, this likely means longer periods of time for relocating employees and assignees to find housing, higher costs for temporary accommodations and assignment/intern housing, which may also mean more destination support.