The value of residential real estate in the euro area in the second quarter of 2024 increased by 1.3% in annual terms, according to a report by the European Union Statistical Office (Eurostat). Prior to that, prices had been declining for four consecutive quarters.
A negative factor for European housing was high mortgage rates, which increased following the rise in key interest rates in early 2022. However, mortgages in Europe have been falling in price in recent months amid the European Central Bank’s monetary policy easing. The ECB cut key rates in June and September, and investors are expecting another 25 basis point cut in November, the Financial Times reports.
Significant growth in housing prices – about 8% in annual terms – was recorded in the Netherlands, Spain and Portugal, and in Croatia, houses went up by 10%. Meanwhile, in Germany, residential real estate increased in price by 1.3% compared to the first quarter, but fell by 2.6% year-on-year.
“House prices in the eurozone have finally started to recover,” said Tomasz Wiladek, senior economist at T Rowe Price. According to him, mortgage affordability has improved not only due to lower rates, but also due to a strong labor market and an increase in household disposable income amid falling energy prices.
Average mortgage rates in the euro area in August amounted to 3.7% per annum, while last November they exceeded 4%. In January 2022, it was possible to take out a mortgage loan at 1.3% in Europe.
