Property: Southern Europe Price Rise Continues. How Athens Is Doing

The premium rental market in Southern Europe is growing rapidly, outpacing growth in property sales.

Southern European cities including Lisbon, Madrid and Athens saw property prices rise sharply in the first half of the year as the ongoing crisis boosted the luxury housing market.

Lisbon saw the strongest rise in luxury residential property prices, up 4.2%, thanks largely to an influx of wealthy foreign buyers, according to data from 30 cities analyzed by property firm Savills Plc.

Amsterdam, Madrid and Athens also saw increases of more than 3%, according to the index, which tracks first-time homeowners in cities around the world.

Investment growth in these areas far exceeded the average of 0.8% recorded across all cities in the Savills index, Bloomberg reports.

As Europe faces housing supply challenges due to high construction costs and economic instability, Americans have become the main potential buyer base in many southern European cities, the report says.

A relatively strong dollar and growing interest in regional lifestyles are attracting US buyers, a Savills report says.

The cost of prime real estate in Dubai has also increasedas the Middle Eastern hub with lower taxes and the “promise” of ultra-luxurious living continues to attract the wealthy.

It is worth noting, however, that although Confidence in the luxury property market has outpaced a broader downturn in many of the world's largest economiessome buyers remain cautious, awaiting more clarity on interest rate dynamics on both sides of the Atlantic.

In the US, persistently high interest rates have put the country's housing market in a tug of war, according to a report from Savills. As many With American homeowners taking out 30-year fixed-rate mortgages, few are willing to re-enter the housing market and risk increasing their monthly payments.. Core home prices fell in three of four U.S. cities tracked in the first half of the year.

At the same time, the authors of the report emphasize that the growth of the luxury rental market continues to outpace the growth of sales markets around the world.

Supply constraints in many cities across Europe, the Middle East and Africa mean that those who want to renting luxury real estate continues to face rising prices.

None of the Europe, Middle East and Africa markets included in the index saw rental prices fall between December 2023 and June 2024.

“High interest rates continue to focus attention on sales markets and push more potential buyers into prime rental markets,” says Kelsey Sellers, associate director at Savills World Research. “We expect rents to continue to outpace capital values ​​until the end of 2024 and into the medium term as supply remains tight in many cities around the world.”

Once again, Lisbon leads the way, along with Dubai and Bangkok. Rents in the Portuguese city rose by 7.5% in the first half of the year, according to the report, in AthensBarcelona, ​​Amsterdam, Berlin and Cape Town all saw rents rise by more than 3% in the first half of 2024, with Athens seeing a 4.6% increase over the six months. This rate is more than double the average growth rate of 2.2% across the 30 cities monitored by Savills.

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