European Prime Property in Short Supply as Demand Heats Up

Evidence of prime stock shortages in European residential markets is growing, owing to an increase in pandemic-induced sales.

In Europe, the resort, coastal, rural, and alpine markets are feeling the pinch, and this is expected to worsen in the coming months, according to Knight Frank.

“The strong sales rates we’ve seen in the last 12 months have been driven almost entirely by domestic buyers, once borders reopen and cross border transactions normalise, we expect stock levels to reduce further,” Knight Frank head of international sales Mark Harvey said.

“We’re making contact with clients who have sat on the side-lines as a result of the uncertainty over the last few months. Not only are we able to share with them a number of off-market properties that we hold exclusively, but also explain that now is a key window of opportunity as we await a second surge in demand as travel restrictions start to ease and overseas buyers return,” he added.

Strong demand, along with sellers’ reluctance to list their home until they know what they want to do next, has resulted in fewer listings in recent months, according to Knight Frank head of international research Kate Everett-Allen said.

“With listings declining, existing inventory being absorbed and construction rates lagging, stock levels are becoming increasingly constrained, and inevitably it is the best-in-class properties that are selling fastest,” she said.

“European cities are also back on the radar of second home buyers and investors.”

Everett-Allen said they expect prices to increase across most European markets in 2021, with Lisbon, London, Geneva, Berlin and Paris to be amongst the frontrunners.

“The big question is will prices accelerate or will sales slow as a stand-off emerges between buyer and seller,” Everett-Allen said.

“In the short-term prices look likely to track higher. Knight Frank’s latest Prime Global Cities Index which tracks the movement in luxury prices across 56 cities confirmed that 11 recorded double-digit price growth in the year to March 2021, up from just one a year earlier,” she explained.

“But cooling measures are coming as policymakers act to curb speculative investment and keep a lid on prices. Despite the shortage of stock, buyers remain price sensitive and are well-informed having had several months to research their planned purchase thoroughly during lockdown,” she concluded.

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