Real Estate

Real estate is a crucial part of the global economy. Residential real estate provides housing while also helping individuals and families build wealth. Offices, logistics facilities, and retail spaces are crucial for the operations of businesses. As an investment vehicle, real estate provides a return by generating income from rents and appreciating. In the investment portfolios of private equity, public companies, and institutional investors, real estate often serves as a hedge against inflation because of its lower volatility than other asset classes.
However, the market is not immune to bubbles, such as the notorious subprime mortgage crisis in the U.S. between 2007 and 2010. After the property bubble burst, the market entered a phase of steady growth fueled by low mortgage rates. This phase ended in 2021 when inflationary pressures triggered interest rates hikes in many countries worldwide and led to the market cooling.

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Trending Facts & Insights

  • Average interest rates for mortgages in the United Kingdom (UK) from March 2000 to January 2024, by type of mortgage
    Feb 22, 2024

    Mortgage rates increased at a record pace in 2022, with the 10-year fixed mortgage rate doubling between March 2022 and December 2022. With inflation increasing, the Bank of England introduced several bank rate hikes, resulting in higher mortgage rates. In January 2024, the average 10-year fixed rate interest rate stood at 4.7 percent. As borrowing costs get higher, demand for housing is expected to decrease, leading to slower house price growth and a potential market downturn. 

    How have the mortgage hikes affected the market? 

    After surging in 2021, the number of residential properties sold declined in 2022, reaching close to 1.3 million. Despite the number of transactions falling, this figure was higher than the period before the pandemic. The falling transaction volume also affected mortgage borrowing. In 2023, the value of new mortgage loans fell year-on-year for three quarters in a row

    How are higher mortgages affecting homebuyers? 

    Homeowners with a mortgage loan usually lock in a fixed rate deal for two to ten years, meaning that after this period runs out, they need to renegotiate the terms of the loan. Many of the mortgages were taken out during the period of record-low mortgage rates and are likely to face notable increases in their monthly repayment. About five million homeowners are projected to see their deal expire by the end of 2026. About two million of these loans are projected to experience a monthly payment increase of up to 199 British pounds by 2026.

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  • Number of existing homes sold in the United States from 2005 to 2023, with a forecast until 2025 (in million units)
    Jan 26, 2024

    The number of U.S. home sales in the United States declined in 2023, after soaring in 2021.  A total of four million transactions of existing homes, including single-family, condo, and co-ops, were completed in 2023, down from 6.12 million in 2021. According to the forecast, the housing market is forecast to head for recovery in the next two years, with the number of sales reaching 5.6 million in 2025.

    Why have home sales declined?

    The housing boom during the coronavirus pandemic has demonstrated that being a homeowner is still an integral part of the American dream. Nevertheless, sentiment declined in the second half of 2022 and Americans across all generations agreed that the time was not right to buy a home. A combination of factors has led to house prices rocketing, making homeownership unaffordable for the average buyer. A survey among owners and renters found that the high home prices and unfavorable economic conditions were the two main barriers to making a home purchase. People who would like to purchase their own home need to save up a deposit, have a good credit score, and a steady and sufficient income to be approved for a mortgage. In 2022, mortgage rates experienced the most aggressive increase in history, making the total cost of homeownership substantially higher. Only 15 percent of U.S. renters could afford to become homeowners and in metros with highly competitive housing markets such as Los Angeles, CA, and Urban Honolulu, HI, this share was below five percent.

    Are U.S. home prices expected to fall?

    The median sales price of existing homes stood at 387,000 U.S. dollars in 2023 and was forecast to increase slightly until 2025. The development of the S&P/Case Shiller U.S. National Home Price Index shows that home prices experienced seven consecutive months of decline between June 2022 and January 2023, but this trend reversed in the following months. Despite mild fluctuations throughout the year, home prices in many metros are forecast to continue to grow, albeit at a much slower rate. 

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  • Average monthly apartment rent in the United States from January 2017 to November 2023, by apartment size (in U.S. dollars)
    Nov 28, 2023

    The average monthly rent for all apartment types in the United States rose substantially in 2021. In 2023, rents began to soften, with November 2023 seeing a monthly rent for a two-bedroom apartment amounting to 1,317 U.S. dollars, down from 1,331 U.S. dollars a year ago.

    Where are the most expensive apartments in the U.S.?

    Apartment rents vary widely from state to state. To afford a two-bedroom apartment in California, for example, a renter needed to earn an average hourly wage of nearly 42 U.S. dollars, which was approximately double the average wage in North Carolina and three times as much as the average wage in Arkansas. In fact, rental costs were considerably higher than the hourly minimum wage in all U.S. states.

    How did rents change in different states in the U.S.?

    In 2023, some of the most expensive states to rent an apartment saw prices drop. Nevertheless, rental prices increased in most states as of October 2023. In North Dakota, the annual rental growth reached 10 percent. 

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  • House-price-to-income ratio in selected countries worldwide in 4th quarter 2022, by country
    May 22, 2023

    The house-price-to-income ratio in the Netherlands was equal to 146.1 index points in the third quarter of 2022, making it one of the countries worldwide, where house prices have risen the most in comparison to income in recent years. The ratio measures the development of housing affordability and is calculated by dividing nominal house price by nominal disposable income per head, with 2015 set as a base year when the index amounted to 100. Index value of 120, for example, would mean that house price growth has outpaced income growth by 20 percent since 2015. Overall, house prices grew faster than incomes in most of the countries.

    Spotlight on the Netherlands House prices varied widely across different provinces in the Netherlands, with Utrecht, North Holland, and South Holland being the most expensive provinces for a home purchase. In Utrecht, the average house price was double the price of a comparable property in the most affordable province, Drenthe.

    How much have prices risen in the Netherlands? Though residential property prices in the Netherlands have been on an upward trend since 2014, in January 2022, the annual house price appreciation hit 21 percent. In 2022 and 2023, the growth of house prices is forecasted to continue, albeit at a slower pace.

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  • 12-month percentage change in house prices in the United Kingdom (UK) from July 2007 to December 2023
    Feb 14, 2024

    House prices in the UK rose dramatically during the coronavirus pandemic, with growth slowing down in 2022 and turning negative in 2023. The year-on-year annual house price change peaked at 14 percent in July 2022. In December 2023, house prices declined by 1.4 percent. According to the Nationwide Building Society, the average house price exceeded 265,000 British pounds in 2022.

    Correction in housing prices: a European phenomenon

    The trend of a growing residential real estate market was not exclusive to the UK during the pandemic. Likewise, many European countries experienced falling prices in 2023. When comparing residential property RHPI (price index in real terms, e.g. corrected for inflation), countries such as Germany, France, Italy, and Spain also saw prices decline. Sweden, one of the countries with the fastest growing residential markets, saw one of the largest declines in prices.

    How has demand for UK housing changed since the outbreak of the coronavirus?

    The easing of the lockdown was followed by a dramatic increase in home sales. In November 2020, the number of mortgage approvals reached an all-time high of over 107,000. One of the reasons for the housing boom were the low mortgage rates, allowing home buyers to take out a loan with an interest rate as low as 2.5 percent.  That changed as the Bank of England started to raise the base lending rate, resulting in higher borrowing costs and a decline in homebuyer sentiment.

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  • Average house price in Canada from 2018 to 2023, with a forecast by 2025 (in Canadian dollars)
    Jan 15, 2024

    The average Canadian house price declined slightly in 2023, after four years of consecutive growth. The average house price stood at 678,282 Canadian dollars in 2023 and was forecast to reach 722,063 Canadian dollars by 2025. 

    Home sales on the rise

    The number of housing units sold is also set to increase over the two-year period. From 443,511 units sold, the annual number of home sales in the country is expected to fall to 489,661 in 2024. British Columbia and Ontario have traditionally been housing markets with prices above the Canadian average, and both are set to witness an increase in sales in 2024. 

    How did Canadians feel about the future development of house prices?

    When it comes to consumer confidence in the performance of the real estate market in the next six months, Canadian consumers in 2024 mostly expected that the market would go up. A slightly lower share of the respondents believed real estate prices would remain the same.

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  • Average sales price of houses in selected cities in Germany from 2012 to 2023 (in euros per square meter)
    Jan 16, 2024

    The average price of detached and duplex houses in the biggest cities in Germany varied between approximately 5,000 euros and 10,000 euros per square meter in the second quarter of 2023. Housing was most expensive in Munich, where the square meter price of houses amounted to 9,931 euros. Conversely, Berlin was most affordable, with the square meter price at 4,802 euros. 

    How have German house prices evolved?

    House prices maintained an upward trend for more than a decade, with 2020 and 2021 experiencing exceptionally high growth rates. In 2021, the nominal year-on-year change exceeded 10 percent. Nevertheless, the second half of 2022 saw the market slowing, with the annual percentage change turning negative in the fourth quarter of the year and that trend continuing in 2023. Another way to examine the price growth is through the house price index, which uses 2015 as a base. In the second quarter of 2023, the house price index measured about 150 percent, which means that a house bought in 2015 would have appreciated by 50 percent during this period.

    Is housing affordable in Germany?

    Housing affordability depends greatly on income: High-income areas often tend to have more expensive housing, which does not necessarily make them unaffordable. The house price to income index measures the development of the cost of housing relative to income. In the first quarter of 2023, the index value stood at 120.8, meaning that since 2015, house price growth has outpaced income growth by about 21 percent. Compared with the average for the euro area, this value was higher.

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  • Mean purchase price of housing in Seoul, South Korea in November 2023, by housing type (in million South Korean won)
    Jan 10, 2024

    As of November 2023, the mean purchase price of housing in Seoul, South Korea amounted to around 819 million South Korean won. The average price of apartments amounted to around 1.05 billion South Korean won while the price of row houses was about 341 million South Korean won.

    Apartments in South Korea Among all housing types, apartments are the most expensive, costing more than one billion South Korean won on average. Living in apartments is typical for Seoul, as an increasing number of citizens move towards the city, causing high population density. As of 2022, more than 40 percent of all households were living in apartments, excluding alternative housing, such as officetels or goshiwons.

    Gangnam Style Based on the average selling price of apartments in Seoul, Gangnam is the most expensive area in Seoul to live in, with an average sales price of around 2.2 billion South Korean won. The area became internationally known due to the viral YouTube hit Gangnam Style by South Korean artist PSY. Since Gangnam is known for its wealthy citizens, the song was inspired by their mannerisms.

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  • Commercial real estate capitalization rates in the United States from 2012 to 2023 with a forecast until 2026, by property type
    Dec 12, 2023

    Retail properties had the highest capitalization rates in the United States in 2023, followed by offices. The cap rate for office real estate was 6.54 percent in the fourth quarter of the year and was forecast to rise further to 7.39 percent in 2024. Cap rates measure the expected rate of return on investment, and show the net operating income of a property as a percentage share of the current asset value. While a higher cap rate indicates a higher rate of return, it also suggests a higher risk.

    Why have cap rates increased?

    The increase in cap rates is a consequence of a repricing in the commercial real estate sector. According to the National NCREIF Property Return Index, prices for commercial real estate declined across all property types in 2023. Rental growth was slow during the same period, resulting in a negative annual return. The increase in cap rates reflects the increased risk in the investment environment.

    Pricing uncertainty in the commercial real estate sector

    Between 2014 and 2021, commercial property prices in the U.S. enjoyed steady growth. Access to credit with low interest rates facilitated economic growth and real estate investment. As inflation surged in the following two years, lending policy tightened. That had a significant effect on the sector. First, it worsened sentiment among occupiers. Second, it led to a decline in demand for commercial spaces and commercial real estate investment volumes. Uncertainty about the future development of interest rates and occupier demand further contributed to the repricing of real estate assets.  

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  • Average residential house price in New Zealand in June 2024, by region (in 1,000 New Zealand dollars)
    Jul 15, 2024

    The price of residential property in New Zealand was the highest in the Auckland region in June 2024, with an average sale price of around one million New Zealand dollars. The most populated city in the country, Auckland has consistently reported higher house prices compared to most other regions. Buying property in New Zealand, particularly in its major cities, is expensive. The nation has one of the highest house-price-to-income ratios in the world.

    Auckland residential market

    The residential housing market in Auckland is competitive. Prices have been slowly increasing; the Auckland region experienced an annual increase in the average residential house price compared to the same month in the previous year. The price of residential property in Auckland was the highest in Auckland City, with an average sale price of around 1.26 million New Zealand dollars.

    Home financing

    Due to the rising cost of real estate, an increasing number of New Zealanders who want to own their own property are taking on mortgages. Most residential mortgage lending in New Zealand went to owner-occupier borrowers, followed by first home buyers. In addition to mortgage lending, under the KiwiSaver HomeStart initiative, first-home buyers in New Zealand can apply to withdraw all or part of their KiwiSaver retirement savings to assist with purchasing a first home. However, even with a large initial deposit, it may take decades for many borrowers to pay off their mortgage.

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Industry Definition

Industry Definition

Real estate is private property in the form of buildings and land that can be used for residential or commercial purposes. Residential real estate includes single-family and attached houses, as well as apartments and condominiums. Commercial real estate refers to offices, industrial and logistic facilities, retail, and hospitality properties.
In this section, Statista provides the most relevant and up-to-date data on the financing, selling, and renting of real estate. Among the key market indicators are mortgage advances, house prices, rents, vacancies, take-up, investment volumes, market leaders, and digital innovation.

More interesting topics from the industry "Real Estate"

More interesting topics from the industry "Real Estate"

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