Apex 03-18 LB

Property Value Growth in Eastern Europe

Many overseas property investors are starting to look towards Eastern Europe rather than the usual established property markets of Western Europe.

Though the traditional markets such as Spain and Portugal are showing good signs of recovery, many countries in Eastern Europe, such as Hungary and the Czech Republic have shown strong property market gains.

A reason put forward for this is the quantitative easing programme from the European Central Bank.

Under the programme the European Central Bank has promised subsidised finance until the end of 2017, and that could be extended.

With this ‘cheap finance’ being available to all, many countries in Eastern Europe, where the affordability factor for property did not fall as much as traditional markets, could take advantage and see property prices rising quickly.

The capital cities of Hungary and the Czech Republic, Budapest and Prague, have seen renewed interest from overseas property investors looking for a higher return for their money, albeit with slightly more risk.

Slovakia is another country in Eastern Europe where strong growth has been recorded. Residential property prices in Slovakia rose at the fastest pace in almost nine years in the first quarter of 2017 as record-low interest rates and the booming economy fuelled demand for housing.

The average price of property per square metre in Slovakia rose by a massive 7.6 per cent from the last quarter of 2016. The Slovakian economy is expected to reach growth of 4 per cent within the next two years, and rising employment is driving new housing demand.

Romania is also experiencing a property price boom, with prices for houses and apartments in urban areas expected to increase by 8-10 per cent by the end of 2017 when compared to the previous year.

Rental prices are expected to follow suit according to the latest survey by real estate consultancy RE/MAX. The agency expects rental prices per square metre to increase by 7-10 per cent by the end of 2017 when compared to 2016, meaning strong yields could be enjoyed by overseas property investors entering the market now.

Again, government programmes and advantageous lending conditions are attracting many investors to enter the market in Romania.

As always, it is important to research carefully any property market you are looking to enter, but it looks as though Eastern Europe could offer strong returns for property investment over the short to medium term.

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