Economic Experts Survey: High Increases in House Prices Expected Worldwide (Q2 2023)

How do economists view the future of the real estate market? The latest Economic Experts Survey (EES) conducted by the ifo Institute and the Institute for Swiss Economic Policy (IWP) examines economists’ house price expectations on a global level. The result: high increases in property prices are expected worldwide over the next ten years. According to the study, the world’s average annual nominal rate of increase will be 9%. In Germany, the figure is expected to be 7.2%.

Global Trend Persists: Real Estate Prices Continue to Rise

Many countries have experienced stark increases in property values and rents in the most recent decade. For example, nominal house prices worldwide increased by an average of 5.4% per year between 2012 and 2022, as data from the Bank for International Settlements shows. However, the Covid-19 pandemic and the resulting trend toward working from home, as well as the high-inflation environment combined with high interest rates, may have halted that trend. A special module in the latest Economic Experts Survey therefore asked experts about their expectations on property price developments over the next ten years.

The results show that the experts continue to expect strong increases in house prices worldwide. There are several regions (e.g., East Africa and South Asia) that are expected to see annual increases in house prices of more than 20%. High increases of 10-15% are also expected in South America, Eastern Europe, Central Asia, and North Africa. More moderate annual increases of 6-8% are expected in North America, Western Europe, Oceania, and Southeast Asia.

House price expectations also depend on experts’ inflation expectations. At the regional level, respondents’ short- (+0.76) and long-term (+0.48) inflation expectations and their assessments of house price developments over the next ten years are highly correlated. Real house price increases are therefore likely to be lower than the nominal values.

info graphic, ifo Institute, EES, Housing Market Expectations

The table shows the arithmetic mean of expected house price developments in the regions over the next ten years for the current Q2 2023 Economic Experts Survey wave.

info graphic, ifo Institute, EES, Housing Market Expectations, Table

Strong differences in expectations for house price developments over the next ten years are particularly evident in Europe. While moderate increases in the price level of real estate are expected in Western and, to a lesser extent, Northern Europe (6.4% and 9.9%, respectively), expectations for annual growth in Southern and Eastern Europe are almost three times as high (18.4% and 14.9%, respectively).

The Economic Experts Survey (EES) is a quarterly survey conducted by the ifo Institute and the Swiss Economic Policy Institute. 1,405 economic experts from 133 countries participated in the survey, which ran from June 14 to July 2, 2023.