The real estate market has experienced steady growth since 2015, marking nine consecutive years of expansion. However, this overall trend has seen its share of fluctuations, particularly influenced by the economic disruptions brought on by the pandemic. Monthly analyses of transaction numbers and volumes reflect these ups and downs.
Concerns about a potential real estate bubble occasionally arise. In 2021, these debates were particularly intense, with arguments both for and against the existence of a bubble. Ultimately, the market continued its upward trajectory without a burst.
Today, similar worries are resurfacing, drawing comparisons to the 2008 financial crisis and raising the specter of another bubble burst. Certain statistics fuel these discussions. For example, in 2008, the sector’s total production value was nearly €5 billion, which plummeted to €1.7 billion by 2014 before rebounding to €5 billion in 2021 and approximately €5.5 billion in 2022. While official figures for 2023 and 2024 are not yet available, projections suggest approaching €6 billion.
Regarding housing stock, there were 394,000 units in 2008, rising to 482,000 by 2022—an increase of about 90,000 units. Annual growth rates have varied significantly: averaging 4.2% between 2002 and 2008, 0.7% from 2013 to 2018, and 1.5% from 2019 to 2022.
During the recognized bubble period from 2005 to 2008, annual housing completions ranged from 16,500 to 18,000 units, tapering off slightly until 2010. By 2014, completions had dropped to 2,700 units (bottoming out at 2,400 in 2015), with figures remaining modest until 2017. Subsequent years saw a gradual increase, with around 9,000 new units annually—approximately half the levels of 2008.
Today, the question of a bubble’s existence requires careful analysis. A bubble is characterized by rapidly escalating prices driven by limited supply and strong demand, creating a “seller’s market” where sellers dictate terms due to scarce alternatives for buyers, supported by easy financing options.
Examining current conditions, domestic demand is seen as weak due to economic challenges, and international interest has waned following geopolitical events. High interest rates have further constrained borrowing and new investments.
Despite these factors, signs of new supply are evident, with numerous construction projects visible, including multi-family residential buildings, duplexes, and mixed-use developments.
In conclusion, the current market does not exhibit the severely restricted supply or overwhelming demand coupled with easy borrowing that typically characterize a bubble. As in 2024, the evidence suggests that the market is not in a bubble today.