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Rental Prices in European Cities are Leveling Out

After continuous, and sometimes steep, increases in rent in major European cities over the past few years, prices now seem to have plateaued and are leveling out this quarter, according to the Housing Anywhere International Rent Index for July 2019. The HousingAnywhere International Rent Index analyses data from over 88,417 listings of private rooms (in shared living accommodation), studios and one-bedroom apartments in Barcelona, Berlin, Brussels, Madrid, Milan, Rotterdam, and Vienna, covering a timespan from Q1 2018 to Q2 2019. “We already caught a glimpse of rental prices reaching a ceiling in the past quarter, but now the trend has been substantiated,” says Djordy Seelmann, CEO of HousingAnywhere. “Tenants are simply not willing or able to pay higher rents, even though the scarcity on the housing market remains as concerning as it was a year ago.”

While all markets saw rental prices increase once again in Q2 of 2019, the rise was considerably less steep than in previous quarters. Across all the cities indexed for rental prices, Barcelona has shown the biggest overall increase year over year. But looking at this past quarter, Barcelona is now among the cities showing the smallest overall increase. “A ceiling is being approached, but this slowdown is not caused by a rise in the number of apartments, studios, and rooms on offer,” Seelmann says. “There is still an urgent need for solutions that increase the number of apartments and rooms, to solve the European-wide problem of housing for young professionals and students.”

Summary of top 3 climbers
1. Across all of the cities indexed for rental prices, Barcelona has shown the biggest overall increase year over year. Prices for apartments have risen by 10.07%, studios by 7.17%, and private rooms by 0.76%. Prices are leveling out however, as a ceiling seems to have been reached: solely looking at the past quarter, Barcelona is among the cities showing a small overall increase.

2. Rotterdam, as compared to 2018, shows rising prices across the board with a: 3.27% increase for apartments, 7.31% for studios and 6.50% for private rooms. With an average rent of EUR 1287 per month, Rotterdam is the most expensive city in the HousingAnywhere International Rent Index.

3. Brussels remains one of the cheapest cities to rent in, but compared to 2018, this city witnessed an increase in apartment prices by 2.93%, studio prices by 8.99% and private rooms by 5.59%. The wide availability of housing, and the flexible attitude of the municipality regarding project development and building transformation, ensures a healthy rental market, for both tenants and landlords.

A rental cap is not a long-term solution
Following the news that Berlin was going to apply an ‘emergency cap’ to rent, the demand for such a measure grew in other European cities. In the Netherlands, the option is currently under examination by the House of Representatives, and the ‘emergency cap for middle segment rents’ is widely supported. But although a rental freeze could stop rental prices from increasing further, it does not change what is on offer, Seelmann argues. In fact, it makes it less attractive for project developers and investors to build new houses and apartments: “If real estate developers earn less, the housing market becomes a less appealing investment option. We already see an effect on the number of real estate deals that are closed. Stimulating new construction remains the best solution to real-estate scarcity. In the shorter term, the re-development and -design of existing buildings can also offer some room for breathing. There is an urgent need for dialogue between the stakeholders – that is; tenants, landlords, property investors, and politicians. Only then can a long-term and sustainable solution for the housing market can be found.”