Experts Expect Steep Price Increases for Real Estate Worldwide

Economic experts are expecting real estate prices worldwide to climb steeply in the years ahead. This is the finding of the latest Economic Experts Survey (EES), which is conducted quarterly by the ifo Institute and the Swiss Economic Policy Institute. According to the survey, real estate prices will increase by an average of 9 percent annually over the next ten years. The experts predict increases of 8.4 percent in the UK, 6.0 percent in the US, and 5.5 percent in France. “The increase in real estate prices is being driven more by factors of demand rather than supply,” says ifo researcher Timo Wochner.

In many regions of the world, increased demand on the real estate market is due to higher living standards and incomes, as well as to population growth and the desire for more living space. In total, 37 percent of respondents cited these factors as being behind the steep price increases. The trend toward working more from home also plays a role. “According to 27 percent of the experts, supply factors such as limited production capacity, higher prices for construction materials, and a lack of building lots are responsible for rising real estate prices,” Wochner says. Monetary policy, inflation, and governmental policy were named by 12 percent of respondents as drivers of real estate price increases.  
 
In Western Europe (6.4 percent) and in North America (7.7 percent), price increases for real estate are expected to be below the global average. Significantly higher growth rates are expected in Southern Europe (18.4 percent) and Eastern Europe (14.9 percent). Real estate price increases are projected to be particularly high in South Asia (25.1 percent), West Asia (22.4 percent), and Central America (24.4 percent). The figures provided are nominal growth rates.
 
At the regional level, the experts’ price expectations for real estate correlate strongly with their inflation predictions. “The actual growth rates will be lower,” says ifo researcher Philipp Heil. “In the UK, house prices have gone up by more than 67 percent over the past ten years, and this trend is likely to continue.” That figure is 112 percent in the US and 25 percent in France.
 
A total of 1,405 economic experts from 133 countries participated in the survey, which ran from June 14 to July 2, 2023.