- Southern Europe’s economies have made a remarkable recovery since the financial crisis more than a decade ago.
- However, due in part to the influence of the “golden visa”, real estate investment has increased rapidly, leading to soaring housing costs.
- Despite vastly different economic conditions, Scandinavia is also facing a housing shortage.
Southern European economies from Greece to Portugal achieved remarkable development. collect since the European financial crisis exactly 10 years ago. Tourism is boominginvestors, and Main business I moved, and a lot of foreigner Move to the area to take advantage of new jobs and environments lower cost of living.
But one side effect of this growth is soaring home prices.Home prices and rents are rising in cities such as lisbon and athensMeanwhile, expensive short-term rentals dominate beach towns from Spain to the Greek islands.
This is also due to the so-called “golden visa”, a very popular residence visa for foreign investors. In countries such as Greece, Spain, and Portugal, Most visa applicants You qualify by purchasing residential property.
Americans make up the majority of foreigners flocking to southern Europe. They are gobbling up some of Spain’s most expensive real estate. In Spain, people spend more per square meter on housing than any other nationality except Danes, the New York Times reported. report last year.And they bought more Portuguese golden visas than any other nationality in 2022.Some people are running away more and more US affordable housing market. But they are now contributing to housing affordability problems across the Atlantic.
Due to the rapid increase in real estate investment, housing values have increased significantly, Gentrification in high-demand citiesevicting long-time residents, and youth prevention From leaving my parents’ house.Despite a rapidly growing economy, the average Southern European still relatively low wages You can’t compete with foreign investors, home buyers, tourists, and remote workers.
Portugal is most popular The lucrative Golden Visa, which rolled out its policy in 2012, is open to wealthy foreigners, including those who have transferred at least 1 million euros to a Portuguese bank account, purchased a property worth at least 500,000 euros, and purchased at least 10 properties. It is a fast-tracking visa for people. obtained employment or donated at least 250,000 euros to a specific cultural or artistic initiative. Visa holders will be able to travel freely to more than 20 EU countries and will also be eligible for family reunification.
João Pereira dos Santos, a researcher at the School of Economics and Finance at Queen Mary University of London, told Business Insider that visas have a huge impact on Portuguese real estate and housing costs. The majority of visa holders use real estate purchases as a vehicle.
“They buy housing, so they don’t invest or create jobs. And we know that some of this housing will soon be put on the long-term and short-term rental market,” Pereira dos Santos said. “In other words, the people applying for the visa did not come to live in Portugal.”
Portugal housing prices 19% increase Pereira dos Santos said the entire market has been affected, from cheap rental properties to luxury homes. “The issue was so prominent that homes negotiated between Portuguese buyers and sellers were valued highly,” he said.
Golden Visa is not the only responsibility. At the same time, Portugal, like other sunny southern European countries, is experiencing a huge surge in tourism. Many people emerging from pandemic lockdowns were left with travel worries and cash to spend. Last year was “the best year in the history of Portuguese tourism,” said Nuno Fazenda, the country’s secretary of state for tourism, trade and services. told Bloomberg. The pandemic has also triggered a wave of remote workers and retirees seeking a higher quality of life in relatively affordable European countries.new Digital nomad visa This is because foreign remote workers are also stimulating demand for housing.
However, as Portugal experiences a worsening housing price crisis, public opinion in Portugal regarding the golden visa has worsened. Pereira dos Santos and colleagues conducted a nationally representative survey in Portugal and found that a majority of respondents were in favor of ending the golden visa program, even if it hurt the Portuguese economy. did. Last year, the country made the following changes to the terms of its Golden Visa program: Excludes real estate investment.
Other southern European countries are also following suit, pointing out the rise in real estate prices. Last month, Spain announced the end of its Golden Visa program. almost completely dependent on About overseas real estate investment.
These measures are likely to result in slower house price growth in some of Southern Europe’s most sought-after regions. But these economies are still doing very well overall, so real estate prices will generally continue to rise, Holger Schmieding, chief economist at Berenberg Bank in London, told Business Insider.
“These economies are good places for domestic and international investors to invest and create jobs across the economy,” Schmieding said. “When job prospects improve, people have the confidence to buy or build a home.The real estate market is largely driven by stronger economic fundamentals. There is.”
Northern Europe faces its own crisis
Southern Europe’s economies are doing much better than the traditional powers of northern Europe.Portugal and Spain grew more than three times faster than Germany It took place in the first quarter of this year. But Scandinavia is suffering from its own housing crisis.
The Netherlands is facing the continent’s worst housing crisis.The house price is doubledOn average over the past 10 years, new homes are now 16 times more expensive Average salary in the Netherlands.Limited building permits, lack of building materials and construction workers, limited land everyone has contributed Housing shortage in this country.
In Germany, relatively high interest rates, an energy crisis, new regulations Homeowners are being urged to switch from oil and gas heating systems to renewable energy-powered heat pumps. This combination is contributing to suppressing demand for housing and construction.
German house prices are expected to begin to recover. Household heating policy Deeper understanding, European Central Bank signal interest rates will be lowered soon wages rise faster than prices. “The German housing price market is nearing its bottom, and the same probably applies to building permits and housing construction,” Schmieding said.
France has also seen a steady rise in housing prices in recent years, but like Germany, housing prices have fallen amid high interest rates. Schmieding also expects house prices and rents to rise again in France later this year, as long as interest rates fall.
As the country continues to face housing affordability challenges, one prominent charity says: Recently called a “social bomb” — Homelessness is on the rise and waiting lists for public housing are growing. This summer’s Paris Olympics will only increase demand for housing, including short-term rentals, in the capital, while the number of homes is decreasing. Apartments for rent on the market.
Despite vastly different economic conditions, all European countries face the same dilemma plaguing the United States: a lack of affordable housing.