Can increased data transparency improve house affordability in Europe?

Can improved access to more accurate data help to counteract property price inflation in Europe? Nils Henning, CEO and Co-founder of CASAFARI, examines how data availability impacts housing markets in the region.

Buying or renting a property in Europe, particularly in Southern Europe, can be a challenge. Inconsistency in information, such as the same property being listed on several platforms, often with different characteristics (such as size, asking price and even address; see Figure 1), creates inefficiencies in both the buying and rental processes. This inconsistency forces buyers, tenants and professionals to spend a lot of time searching for the ideal property, without confidence that the information they find is reliable.

Additionally, when properties are listed directly by their owners (see Figure 2), it can lead to  unprofessional practices, particularly in rental contracts. These practices include landlords adding rules for tenants that do not reflect existing legislation or that discriminate tenants according to their nationality or origin, landlords renting properties for uses other than what they are legalised for, or landlords adding clauses to increase prices in ways that are not established by legislation. This also presents a risk in property sales, for example, when the seller might not want to reveal hidden damages to the property or refuses to remove the furniture from a property they are selling, even when the buyer does not want it, and the legislation requires them to.

Price instability is another significant issue that is arguably connected to the slow uptake of digital tools that aggregate data. Individuals often set prices based on personal instincts or perceptions of the market based on a small sample size found in their own company data. Reluctance by agents to invest in, and capitalise on, digital tools to improve data-driven decision making can result in properties being priced at a higher rate than would be determined appropriate with more detailed data analysis. The result of this lack of access to data can drive prices up at the expense of buyers and tenants.

Limited housing supply is driving up property prices

Besides inconsistency in property data, the European housing market is marked by an imbalance in supply and demand. The conversion of long-term housing into short-term holiday rentals in many city centres, combined with high demand for city centre property and a lack of space or investment to build new housing are driving an increase in housing prices. This has visible consequences: rising rental prices are pushing first-time buyers and those on average or low incomes out of the most central and sought after neighbourhoods.

Research published by Savills in 2023 about the European property market shows that this is true in capitals or larger cities across the continent, with examples including Germany, the UK, the Nordic countries, Spain and France. According to Savills, the cost of renting a one-bedroom apartment in the city centre represented more than 55% of the average net salary in cities like London, Lisbon, Paris, Stockholm, Amsterdam and Berlin.

CASAFARI’s data shows that, from 2019 to 2024, Lisbon faced around 50% increase in rents for two-bedroom apartments, compared to 52.94% in Madrid and 35.71% in Rome, meaning that renting has become increasingly hard to afford in these areas. Berlin rents also rose by 4.76% in the previous three years.

Eurostat figures showed that, on average, rents increased in the EU by 18% between 2010 and 2022. The largest increases were registered in Estonia, Lithuania and Ireland, with increments of 210%, 144% and 84%, respectively.

The rise in rents can take a toll on household incomes. The Eurostat study also explained that, in 2022, more than 10% of the EU population lived in households where housing costs exceeded 40% of their income. This is true, for example, for 22.5% of citizens in Denmark and 27.3% of citizens in Greece.

Increases in house prices have also been significant over the past decade, with a steady upward trend since 2013. According to the European Commission, house prices rose by 37% between 2010 and 2021, with particularly sharp increases between 2015 and 2021. While 23 EU member states saw this rise, the largest surges occurred in Estonia (+139%), Hungary (+122%) and Luxembourg (+115%). Eurostat reinforces this data, stating that house prices more than doubled in seven countries since 2010.

This trend is far from over, as data also shows that house prices continue to climb, with Poland, Bulgaria and Lithuania leading the way in 2023 with increases of 17.7%, 15.1%, and 10.4% respectively. Overall, EU house prices have risen by 2.9% in the second quarter of 2023.

Looking at individual cities, the rise in property prices has been equally noticeable. CASAFARI’s data reveals that between July 2021 and July 2024, cities including Madrid, Porto and Milan have experienced an increase in the average price per square metre for a two-bedroom apartment of 38.07%, 21.60% and 7.27% respectively (Figure 1).

Counteracting property price inflation with data

Real estate is the largest industry in the world, with around 380 trillion dollars in value (equivalent to more than three times bigger than all economies combined) but it is also well known for being slow to innovate. As a result, the chaos of data often favours situations such as buyers and renters paying for overpriced properties and facing neglect of regulations.

But, when Proptech companies can democratise access to data by providing access to aggregated and more accurate data, they help market stakeholders to make better decisions. More accurate data enables real estate professionals to have greater confidence in their understanding of market dynamics and prices. This allows professionals to provide better advice to tenants, homebuyers and investors regarding property pricing and how the market is behaving. With these tools, professionals can also add layers to their conclusions, filtering conclusions per area, type of property and typology, for example, transforming numbers into insight.

The more democratised access to property data there is among stakeholders in the renting or buying process, the closer we get to normalising prices in each property market.

Well organised datasets also allow for comparisons between properties that not only have the same location and characteristics, but also the same conservation conditions, making sure older apartments are not priced the same way as a refurbished one would.

Having information about how long comparable properties have been on the market also helps agents and clients to create better strategies for buying or renting, for example. If the tenant or buyer wants to instigate a decrease in price, their estate agent only needs to show the owner that comparable properties with similar asking prices have been available for dozens or even hundreds of days. In the end, information helps to press for affordability.

Growing investment in proptech reflects demand for improved access to data

The scale of investment in Proptech platforms in recent years reflects the potential that data solutions have in improving the stakeholder experience. A report published by the market research company KVB predicted a growth of 14.9% CAGR to the European Proptech market from 2022 to 2028.

And while we know that data transparency plays a crucial role in the normalisation of property prices, it is not the only factor influencing market trends. Other external variables, such as shifts in government policies and broader macroeconomic conditions – like inflation or interest rate changes – also have a significant impact on property values. Therefore, transparent and accessible data serves as part of the solution for stabilising prices, but these external forces must also be considered.

However, even in this context, data becomes a powerful tool for professionals and their clients, allowing them to stay updated with the market and assess the impact of fluctuations or regulatory changes. This is particularly the case in less regulated markets, where pricing inconsistencies can arise. Additionally, in situations where there is a significant imbalance between high demand and low supply, the ability to clearly assess property data is crucial to ensure that buyers and renters are equipped with knowledge that helps them avoid being overcharged or exploited and enables them to navigate a market where prices might otherwise feel unpredictable or inflated.