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Will Soaring European Rents be Slowed by Higher Interest Rates?

The HousingAnywhere (housinganywhere.com) International Rent Index report for Q2 2022 has revealed that average rental prices have increased by a staggering 19.3% over the past year.
Apartment prices have increased by 20.8%, studios by 22.9% and private rooms by 14.2%. This drastic increase has been driven by surging demand that is already surpassing last years’ rental peak season, which normally occurs in Q3.

“The desire for a flexible and borderless lifestyle exploded as mobility restrictions got lifted,” says Djordy Seelmann, CEO at HousingAnywhere. “We are witnessing an increase in demand due to the revival of international mobility. For work, for study, or just to improve quality of life. International student applications are sky-rocketing and so is people’s ambition to build a career beyond the borders of their country of origin. It is no longer just about the place where people need to be. It is about the place they want to be.”

Tourism recovery
Ever since travel restrictions were lifted, demand has increased for short-term rentals. With housing markets across Europe already short of supply, the recovery of tourism and the increasing demand for short-term rentals is contributing to the rising rental prices as many cities are experiencing a shortage of available accommodation.

According to Seelmann, due to the high demand and the potential of higher yields for short-term rentals, property owners across Europe now have fewer incentives to offer their properties for mid- to long-term stays, which has created fierce competition for good quality long-term rental properties.

He adds: “In prime cities such as Amsterdam, Lisbon, Paris and Milan, we already see record high rental prices, which will continue to rise. And in addition, cities such Rome, Munich, Reykjavik, Berlin and Hamburg showcase sharper quarter-on-quarter increases in Q2, which suggests that it will not be too long till the rental prices catch up with the above mentioned prime cities.

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