The HousingAnywhere International Rent Index report for Q2 2020 shows that quarterly rental prices have dropped in Q2 for nearly all European cities included in the Rent Index. While early signs of the impact of the Covid-19 pandemic on rental prices were already noticeable in the first quarter of 2020, the effects of the travel ban which was valid from mid-March, are now fully visible.
Rents for single rooms have dropped the most by year-over-year comparison, while prices for apartments and studios are less impacted. This is a result of strengthening local markets: even though demand for these properties has decreased significantly among expats and young international professionals, it remains high among the local inhabitants of larger European cities. More single rooms are left vacant as there is less demand for these properties from international markets. Cities that were less impacted by Covid-19, in countries that were able to reopen their borders in mid-June, are showing smaller drops in rental prices as a result.
Italian cities are showing the biggest drops in rental prices of all cities featured in the Rent Index. Milan, the capital of Lombardy and the region where the virus struck the country the hardest, saw the biggest decreases in rent of all the cities in the Rent Index. Compared to the previous quarter, one-bedroom apartments dropped by -7,8% to EUR1,096 per month, a drop of -4,6% compared to Q2 2019. Turin, located 140 km from Milan, is showing a quarterly decrease of -7,8% for one-bedroom apartments to EUR 812 per month, a decrease of -5,9% compared to last year. In Florence, rental prices for one-bedroom apartments dropped by -6,9% to EUR 918, a drop of -4,6% compared to last year.
Helsinki shows a small impact on rental prices compared to the previous quarter: -0.1% for single rooms, -0.07% for studios, and -0.02% for one-bedroom apartments. In Reykjavik, we see a similar trend: -0,06% for single rooms, -0,07% for studios, and -0,02% for one-bedroom apartments, compared to Q1. Both cities have positive year over year rental price increases for apartments. Compared to 2019, rental prices for one-bedroom apartments in Helsinki increased by 1,4% to EUR 1,399. In Reykjavik, the price for one-bedroom apartments increased by 3,6% compared to last year to an average of EUR 1,081 per month. Helsinki had a peak in the number of Covid-19 cases in mid-April. Starting June 15, Finland has reopened its borders for the Baltic countries and the other Nordic countries, except Sweden. Reykjavik’s peak also came mid-April and they reopened their borders on June 15, with a mandatory 14-day quarantine for all travelers.
Rental prices are dropping for rooms, studios, and apartments evenly for Berlin with -5%. As a popular destination for internationals, the city was hit hard by the travel ban. At the same time, rents have been decreasing since February when the Mietendeckel (rent cap) became active. In an effort to boost the economy after the coronavirus pandemic shutdown, the German government has reduced the VAT for 6 months, from July 1 until December 31st. German VAT rates will drop from 19% to 16% (the regular VAT rate) and from 7% to 5% (the rate applied to food, medical supplies, public transport, et cetera).
Apartment prices in Madrid dropped by -2.3% to an average of EUR 1123 per month. With the country opening up again for international travel, rents for June have started to recover to January levels again. For Spanish cities, the longer-term expectations are quite favorable. Spanish economists studying the impact on the real estate market agree that the impact of Covid-19 will be most visible in Q3 of this year. However, they also expect a speedy recovery as there is a high demand for accommodation and the country is in a much stronger financial situation than it was in 2008.
As a result of people having to (partly) work and study from home, there is a greater demand for higher quality accommodation, outdoor space and green areas. Tenants are searching for apartments and studios with plenty of space including gardens and balconies. Tenants are also switching places more, in search of an upgrade from their current place. Accommodation that provides a separate study or work area, or that can offer these facilities near the accommodation, are also highly sought after.
As a continuation of a trend already visible in Q1 of 2020, more and more landlords are making the switch from short term rentals to midterm rentals. Also, landlords diversifying their portfolio is a continuing trend that was first visible in Q1. Djordy Seelmann, CEO of HousingAnywhere:
We currently see a tenants’ market, where supply outnumbers demand. Whether demand will recover, depends on when and to what degree international mobility will return. With a second wave looming, the international rental market remains turbulent. While international student numbers are expected to drop in the upcoming academic year, educational institutions expect programs to return to normality by January 2021.
Despite the rental market shifting towards tenants, many key university cities still have a housing shortage. With the blended approach universities have announced for September, and the high number of enrolments European universities are expecting in January 2021, it remains to be seen how long rental prices will stay at this level or even start increasing again.
For this rent price index, HousingAnywhere analyzed 102,890 properties listed on the platform between April 2019 and June 2020. To ensure the data was representative, properties that did not receive active interest from potential tenants, as well as listings that were considered outliers, were excluded. Properties deemed as too expensive or cheap were not considered for this report as they threatened to skew the data. The report comprises cities that could provide a sample large enough for the data to be reliable. Data is shown only for single rooms in joined living arrangements, studios, and one-bedroom apartments. The report is also available in Spanish, Italian, German and Dutch.
HousingAnywhere is the world's largest rental accommodation platform for young professionals and international students boasting over 50,000 active advertisements and over 8 million users in over 60 countries. More than 150 partner universities recommend their students to use the HousingAnywhere platform. The Rotterdam-based technology start-up employs 120 people.
For more information or to request visuals, please contact
Simone Pouw, PR Manager