This is probably why there is a lack of construction then. In my city (small European capital) most new properties are marketed as investments - with the idea y

This is probably why there is a lack of construction then. In my city (small European capital) most new properties are marketed as investments - with the idea you buy and after a few years sell for more than you paid or rent it covering the mortgage. The real estate market here is still not amazing for the lowest earners, but for anyone even remotely middle class they are doing ok. On the supply side the number of properties is growing at a consistent rate. The biggest issue here is the total mortgage interest you pay is already 5% and EURIBOR is set to continue growing (mortgage interest is not fixed, it's recalculated every 6 months). For a lot of apartments in the city centre, the rental price is less than the equivalent mortgage payments if you were to buy today. A crash is likely coming, and the first thing that will be cut is new construction. However most people want apartments in the city... Last year I moved 20 minutes drive / 40 mins by bus into the suburbs and bought a 140sqm house. The price I paid was less than a new 50sqm apartment would cost anywhere close to the main parts of the city.