The housing situation in CEE

With more than 110 million people, Central and Eastern Europe (CEE) represents around 25% of the EU population. Trends show people moving from rural areas to cities in search of employment, education, and other opportunities – looking for flexible, high-quality rental housing. This results in continually growing cities in between 7% and 28% until 2050 as well as increasing demand for rental apartments and managed properties.

Ranging between 70% and 90%, property remains the predominant form of housing in CEE. However, over the last decade house prices increased in the range of + 34% up to + 108%, continuously deteriorating affordability. In return rental housing gains momentum and grew tenfold within 20 years. It is expected that this trend will gradually increase as younger generations tend to prefer rental over ownership. They make lifestyle choices which favor mobility and appreciate concepts of sharing economy.

Moreover, as both labor and housing markets are becoming increasingly volatile, the situation of a household may change in a short timeframe. While the United Nations Human Settlements Programme (UN-Habitat) recommends that the net monthly expenditure on housing cost should not exceed 30% of the household’s total monthly income, this is increasingly the case for many.

Inflation combined with higher interest rates further limits construction activity. Moreover, the European Union set itself the ambition to become the world‘s first climate neutral continent by 2050. This has significant implications for the housing sector as buildings account for around 40% of energy consumption and around a third of greenhouse gas emissions in the EU. Current renovation rates in the EU (0.4–1.2%) will need at least to double or even reconstruction may be required to reach the EU‘s energy efficiency and climate objectives. Investments in energy efficiency and decarbonization are expected to further increase rental prices.