We’ve compiled a list of the top five countries for first home buyers. Click through the below set of images to see what factors contributed to our ranking.
Disposable income to cost-of-living ratio
This figure represents the percentage of the average disposable income (income after taxes and other social contributions) that isn’t spent on cost-of-living expenses.
Increase in house prices
The percentage of increase in house purchase prices since 2015. High increases don’t necessarily represent high purchase prices, but rather, high demand potentially due to factors like affordability and low mortgage interest rates.
Long-term investment rating
Based on Global Property Guide’s 5-star rating system. This rating indicates the potential to profit off the property over time, with a 5-star rating being the most attractive.
Average mortgage interest rate
The average interest rate for long-term mortgages.
Percentage of homes owned outright
A high percentage of people owning homes outright may indicate more favourable conditions in which homebuyers may have some level of ease in obtaining and paying off a home.
Government grants/support aimed at first home buyers
Any government financial aid targeted at first home buyers provides some indication of governments recognising the difficulty of purchasing a first home and actively providing extra support.
It’s difficult to establish a timeline that details when we’ll be COVID-free, let alone how fast the global economy will recover post-COVID. However, experts from the OECD have projected that the economy in many countries will decrease by five per cent on average by 2022 compared to pre-COVID times.10 In contrast, a few countries in Asia are expected to come out the other end with an increase, including China, which has the highest expected increase of 14.7%.11
Developing nations have been hit the hardest due to lack of economic resources and reduced demand for the trade of their raw materials.11 This is primarily due to the substantial and permanent COVID-related costs that can’t be afforded by developing nations, such as government subsidies to prevent mass unemployment and the purchase of vaccines.11
Therefore, economic recovery, as well as the housing market of each country, will likely occur at different rates.
Beyond that, it’s difficult to predict the future of the global housing market due to the varied conditions and the unstable state of the economy. The only definitive statement we can make is that it’s clear that COVID-19 has impacted the housing market in almost all countries with some countries being more severely affected than others.
With that in mind, we’ve compiled this list in hopes that after COVID, our efforts to preserve what has been taken away will succeed and the economy will stabilise and resume from a state that hasn’t been irreparably affected.
The percentage of the average disposable income left over after cost-of-living expenses will provide some indication of what the quality of life of a country’s people looks like. The OECD defines disposable income as income after taking into account net interests, dividends, taxes and other social contributions (this may vary from country to country). Cost-of-living accounts for food, housing, utilities, clothes, transportation, personal care and entertainment.12
If the cost-of-living is higher than the average disposable income, this may reflect that the average citizen may not be able to afford necessities, and therefore, may have a poorer-than-average quality of life. Statistics for disposable income and cost-of-living came from the OECD.
Increases in house prices usually occur when there’s a high demand in the market and not enough supply, resulting in market growth. Increases in demand may occur due to, for example, low interest or borrowing rates (in other words, when it’s easier to buy a home).
Low increases in house prices represent stagnation in the housing market, presumably due to low purchase power or unaffordability.
We attained the data that measures the increases in house prices from the OECD. The percentages indicate the changes in price from 2015 to the latest available changes.
A high long-term investment rating indicates strong prospects for profiting off the property over time. This rating was retrieved from the Global Property Guide.13 According to their rating system, a rating of one or two indicates risky or poor returns. A country with a rating of three to five indicates the following:
Countries with higher ratings will have more of the above features. Note that these ratings were taken from one major city per country and may not reflect long term investment prospects for the country as a whole.
A low mortgage interest rate allows homebuyers to pay off their homes quicker without spending more on interest. Low interest rates can encourage people to buy houses and growth in housing markets.
A high percentage of people owning a home outright is likely to indicate that a high portion of the population is able to obtain and own homes or pay off their mortgage quickly.
Governments may provide financial assistance specifically for first home buyers, which demonstrates the government’s willingness to help younger people in what can be a market that’s difficult to navigate. Most countries offer some type of aid for home buyers, which first home buyers can also use. However, many of these have specific eligibility criteria, which we were unable to access.
We didn’t include this criterion to score or rank the countries as government information regarding support for first home buyers was limited due to language barriers. That’s to say, we were unable to find the level of support offered by certain countries.
To determine the top five countries, we first found the aggregate of each criterion. Then we calculated the percentage that each individual figure contributes to the aggregate. These percentages were then added together by country. This score was turned into an index with the largest score ranking first.
For average mortgage interest rates, we turned all the figures into negative numbers so the lowest interest rate had a positive impact on the overall score.
We were unable to get data for some countries, including the long-term investment rating for South Korea, Denmark, Sweden, Iceland and Mexico; and the own outright rate for Japan. This will skew the results.
1 Deloitte (2020). Property Index: Overview of European Residential Markets. Accessed 11 January 2021.
2 Global property Guide (2020). Slovakia’s housing market grows stronger. Accessed 15 January 2021.
3 Global Property Guide (2019). Hungary’s housing market boom continues. Accessed 8 January 2021.
4 Global Property Guide (2021). Hungary’s house prices in freefall. Accessed 7 June 2021.
5 Ober Haus (2021). Real Estate Market Report: Baltic States Capitals Vilnius, Riga, Tallinn. Accessed 31 May 2021.
6 State Land Service Republic of Latvia (2020). COVID 19 and the Real Estate Market in Latvia up to Autumn 2020. Accessed 31 May 2021.
7 Public Broadcasting of Latvia (2020). Interest in housing remained high in 2020 in Latvia. Accessed 31 May 2021.
8 Idealista (2021). Price report for properties for sale in Italy. Accessed 7 June 2021.
9 Global Property Guide (2021). Despite pandemic-induced recession, Italy remains steady. Accessed 7 June 2021.
10 Accessed 11 January 2021.
11 Steven Schifferes (2021). World economy in 2021: here’s who will win and who will lose. Accessed 11 January 2021
12 OECD (2019). Household disposable income. Accessed 11 December 2020.
13 Global Property Guide (2020). Yields in premier cities, investment ratings. Accessed 11 December 2020.