Southeast Europe emerges as the region with the lowest residential property prices on the continent in a recent report by Deloitte. However, despite the affordability of these homes compared to the rest of Europe, it is still a financial challenge for many local citizens to buy their own home. 

Across the countries assessed in the report, Bosnia & Herzegovina recorded the lowest average transaction price for new dwellings at €1,315 per square metre, followed closely by Greece and Romania at €1,463 and €1,504 per square metre respectively. 

In 2023, Israel once again was the priciest country for real estate, with an average transaction price of €5,439 per square metre. Austria maintained its position as the second most expensive market, with average prices reaching €4,920 per square metre. Germany was not far behind, with properties averaging €4,700 per square metre.

Hungary experienced the most significant price surge compared to 2022, with new home transaction prices rising by 13.3%. Poland and Portugal also saw substantial increases, with prices climbing by 12.2% and 11.5% respectively.

In terms of capital cities, Budapest led the way with an 11.2% rise in transaction prices. Warsaw followed with a 9.7% jump, while Oslo, Belgrade and Prague saw more moderate increases of 7.2%, 2.9% and 1.8% respectively.

Affordability map 

Deloitte assesses affordability by looking at how many gross annual salaries are needed to purchase a new home. In this regard, the Czech Republic is the least affordable country in Europe, with the average citizen needing to invest the equivalent of 13.3 annual salaries to buy a new home. 

Neighbouring Slovakia is no longer the most challenging country for purchasing an average new home. In 2023, Slovak citizens needed to spend 12.7 times their average gross annual salary to afford a typical new home, a decrease of 1.4 salaries compared to the previous year.

Following on, Israel, Ireland and Hungary each require an average of 10.2 gross annual salaries to buy a new home.

While Bosnia is among the more affordable nations in terms of price per square metre, citizens still require between six to eight gross annual salaries to afford a new dwelling. 

In Serbia and Croatia, citizens must save an equivalent of eight to ten gross annual salaries to afford a new apartment. 

Home buyers in Romania, on the other hand, only have to save an equivalent of between five and six gross annual salaries to be able to buy a new home.

Costs are also relatively low in Greece, Italy, the Netherlands, Poland and Slovenia. 

The most affordable properties are in two of Europe’s most affluent countries, Norway and Denmark, where citizens only need an equivalent of less than five gross annual salaries to buy their own home.

Rising interest rates across Europe in 2023 have made mortgages less accessible, particularly for first-time buyers. As central banks raised rates to combat inflation, borrowing costs surged. 

Deloitte analysts commented in the report on the deficit in affordable housing in Europe. 

“Given this, governments have begun initiatives to build more affordable units and regulate rental markets. The efforts also explore the use of innovative solutions for cheaper affordable products, which will help drive down costs and speed up development, such as modular building techniques. Needless to mention, this issue is integrated with the overall socio-economic growth as well as overall stability,” says the report. 

“Therefore, it remains a priority for all policymakers as well as industry leaders to ensure that there is an adequate supply of affordable housing.” 

While the main focus of the report is on property purchases, it also points out that the rental market in Southeast Europe has similar affordability challenges. 

While rental prices are significantly lower than in Western European cities – such as London, where rents have soared to €33.8 per square metre – local incomes are often insufficient to comfortably cover costs. 

There has been a hike in prices in several Bulgarian cities, notably Burgas. While cities like Burgas have some of the lowest rental prices in Europe, last year saw a dramatic increase in rental costs, with Burgas experiencing a 125.8% rise. Burgas was followed by Sofia with 98.1%, and Varna with 66.8%.