The story of 2024’s global residential market – and real estate trends for 2025

Last year, the global real estate market once again proved its resilience. Despite interest rates holding at their highest levels in decades through the first half of the year, demand remained surprisingly robust and house prices rose overall.

Most central banks around the world have now started cutting interest rates, which should help to further spur the market on through 2025. Meanwhile, a continued rebound in international tourism could create opportunities for investors and real estate professionals alike.

Let’s take a look back at the story of the global real estate market in 2024, and what factors and trends could influence the market in the year ahead.

A look back at the real estate market in 2024

While higher interest rates did dampen demand last year, the global housing market was resilient. According to Knight Frank’s Global House Price Index, annual growth across the 56 national markets covered in the report reached 3.6% in the first quarter and 3.3% in the second quarter.

Central banks began cutting rates from the second half of the year. The European Central Bank (ECB) was one of the first to start unwinding interest rates, delivering its first cut in June, with Canada following shortly after. The Bank of England (BoE) started its cutting cycle in August, while the Federal Reserve held back until September.

With mortgage rates coming down in the latter half of the year, demand picked up, making it highly like that global real estate prices rose overall in 2024. A Reuters poll of almost 150 housing analysts showed that the respondents expect house prices to rise in 2024 and again in 2025.

The luxury market came out of 2024 practically unscathed, with cash buyers unfazed by higher mortgage costs. Some particular hotspots for luxury real estate in 2024 were the US, the UAE (including Dubai and up-and-coming rival city Ras Al Khaimah) and Malta.

Other popular locations for international buyers in 2024 included Portugal (which has steadily grown in popularity in recent years), Sweden, and Canada – despite the Canadian government extending its ban on foreign ownership of residential properties in certain areas. Houses in southern Europe attracted increased demand from American buyers, thanks in part to a stronger US dollar.

The short-term rental and tourism market rebounded in 2024, following the turbulence in the wake of the pandemic, surging fuel costs, and international conflicts. With the post-Covid ‘staycation’ trend continuing to fade and wage growth catching up with inflation, the tourism industry bounced back.

Europe held its top spot as the leading tourism destination last year, while the Middle East and North Africa both saw unprecedented growth – despite regional conflicts.

Real estate market trends for 2025

Interest rates

With central banks around the world expected to continue or begin cutting interest rates this year, 2025 could see global house prices and the transaction of volumes both rise.

The ECB is expected to continue cutting at a relatively aggressive pace, with many analysts forecasting that it will lower its key rate from 3% currently to 1.75% by the end of the year. The outlook for the BoE is similar, although rates are set to remain higher at 3.75%, down from 4.75% currently.

Meanwhile, the Fed may only cut rates by another 25 basis points in 2025, which would bring the fed funds rate down from 4.25%-4.5% to 4%-4.25%.

However, there are inflation risks that could derail central banks’ plans to cut rates. With Donald Trump vowing to enact sweeping tariffs, some economists believe trade taxes could drive up prices.

National policy

Speaking of Trump, the new US President’s policy plans could affect the international real estate market. If tariffs do drive up the costs of imported construction materials, then this could squeeze supply and increase prices.

Tighter immigration laws could dampen demand for certain types of property, while tax cuts could potentially further fuel the healthy US luxury market.

In the UK, Labour’s 2024 Autumn Budget could potentially deter overseas property investment. Stamp duty on additional homes has increased from 3% to 5%, and the UK will abolish its non-domicile tax regime (replacing it with a residence-based system) in April this year.

Spain could see a flurry of activity in the first quarter of 2025 before international sales taper off, as the country announced in January that it would officially end its Golden Visa scheme on 3 April. The scheme grants residency in Spain for those investing in the country, including buying property worth €500,000 or more.

Short-term rentals and tourism recovery

Many analysts expect last year’s recovery to accelerate in 2025, creating fresh opportunities for property investors and real estate professionals. Easing geopolitical tensions could release pent-up tourism demand, and an expected recovery in the global economy may further fuel international travel.

For investors, vacation hotspots are once again prime locations for properties that can cater to a growing demand from holidaymakers and remote workers. As flexible work arrangements persist, many professionals are seeking extended stays in desirable destinations, blending work and leisure.

Meanwhile, real estate agents and property managers are likely to see heightened activity in these markets, with renewed interest from both domestic and international buyers.

Developments in proptech

The coming year promises some more exciting developments in proptech, with the expected pickup in the international property market potentially driving new activity.

For instance, the industry could see increased digitisation of property records, legal documents and transaction processes.

In particular, our Redpin Payments service is set to be a gamechanger in the global property market. Payments allows real estate professionals to manage every deal digitally from one easy-to-use control centre. It simplifies overseas property transactions for everyone involved, providing increased security and a streamlined experience.

Meanwhile, the ongoing growth of AI will also impact the real estate sector, particularly in property valuations. And the continued development of blockchain technology will likely make property transactions more transparent and secure by creating immutable records that reduce the risk of fraud.

Connecting the dots in 2025

While 2024 started slow, falling mortgage costs and a rebound in international travel helped spur on the global property market last year.

The coming year offers many reasons for optimism. Mortgage rates are expected to continue declining, the short-term rental market is set to extend its recovery, and there are hopes for a global economic rebound.

However, huge uncertainty remains. Geopolitical tensions, economic risks and inflation surprises could all trigger some turbulence.

Whatever happens, we’ll keep connecting the dots in 2025, simplifying life’s most important payments and streamlining global property transactions.

Please note that this blog doesn’t contain legal or investment advice. It’s very important that you always get independent legal and tax advice before entering any property transaction.