Central and Eastern European countries top the list for real estate investments, according to a new report.
Lithuania and Hungary are among the best countries for invest in real estatewhile Belgium and France They are among the worst, according to a new study by the British relocation company 1st Move International.
The report examined the key elements of real estate investments in all European countries, including property tax rates, income tax and gross rental incomeand their conclusions suggest that Lithuania is the first choice as the best country for real estate investment.
The best places to invest in real estate in Europe
In Lithuania, the capital Vilnius promises an average rental yield of 5.65%, according to the latest data from Global Property Guide. Rental prices are high in the country, more than 170% of what they were in 2015according to the OECD. The income tax on rentals is a moderate 15%. Foreigners have no restrictions on buying property.
Property prices rose more than 10% in the second quarter of 2024 compared to the previous year, according to ‘Eurostat’, and the trend is likely to continue, providing a good return on investment.
Estonia is the second best option for investors. Non-residents of the Baltic country can also buy property in the city. The purchase cost, including taxes, is considered low, around 1.3%. Meanwhile, rental prices are relatively highwith an annual gross yield of 4.5% and an income tax of 20%. With property prices up 6.7% over the year to June 2024, the value of the investment could increase further.
Romania is in third place in this report, where the advantages include some relatively cheap additional purchase costsa very low average rental income tax rate of 10%, and a relatively high gross rental yield of 6.46% per year.
Ireland promises high returnsmainly due to high rental prices, but high taxes could take a good chunk out of annual net income. He country faces a real estate crisisas not enough homes are being built for the growing population, while prices continue to rise.
According to this report, there are also good opportunities to invest in real estate in Central and Eastern European countries such as Hungary, Slovenia and Polandwhere rents are high (in Hungary, 180% of their 2015 level), but taxes are moderate. House prices in Poland rose by 17.7%, in Hungary by 9.8% and in Slovenia by 6.7% in the 12 months to June 2024, according to ‘Eurostat’.
The worst places to invest in real estate
Meanwhile, the worst countries to consider real estate investment according to this report are Belgium, followed closely by France and Greece.
Belgium has one of the highest transaction costs in Europeand the income tax on rentals can easily reach 50%. The average yield is around 4.2%, but can be higher in Brussels. House prices increased 3.4% year-on-year in the second quarter of 2024.
France is considered the second worst country to invest in real estateaccording to the report, which highlights that taxes and purchase and rental costs are relatively high. For example, the average income tax rate for real estate investors is 18.28%. The annual gross rental yield is around 4.5%. According to ‘Eurostat’, French real estate prices have fallen by 4.6% this year.
Greece ranks third on the list of the worst countries for real estate investment, due to high purchase costs and high levels of income tax, with average rates of rental income tax higher than 33%, the report states.
What Google can say about trends
The report analyzes which countries are the most popular based on Google searches and concludes that Spain and Portugal are the main destinations to buy. Global searches to buy a property reached 279,000 between 2023-2024 for Spain.
The country offers tax benefits for non-residents to foreign investorsa standard rate of 19% for EU/EEA citizens or 24% for third-country citizens on taxable income (such as renting a property) in Spain.
The second most searched country was Portugalwith more than 270,000 searches for terms related to the purchase of properties in the country, where Foreigners can buy properties under the same conditions as locals.
ADVERTISINGHowever, the popularity of these two countries has caused a chronic shortage of affordable housing for the natives. Nominal house prices have increased by almost 70% in Portugal since 2015, according to the OECD.
Please note: This information does not constitute financial advice, always do your own research above to ensure it is suitable for your specific circumstances. Please also remember that we are a journalism website and our aim is to provide the best guides, advice and expert advice. If you rely on the information on this page, you do so at your own risk.
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