EU housing market sensitive to economic processes
Eurostat has assessed the housing market dynamics by analysing the situation in different countries. In general, experts note a change in trend: the cost of renting is outstripping the increase in house prices.
In the first quarter of 2023, the cost of houses and apartments in the European Union fell by 0.7% compared with the previous three months. At the same time, rents rose by 0.9%. Even though the fluctuations were small, analysts are mainly interested in the trend. The fact is that house prices have been falling for more than a quarter now. In the fourth quarter of 2002, for example, property prices fell by 1.4%.
Compared with a year earlier, rents in the EU rose by 2.9%. Looking at the situation over a longer period, since 2010, rents for European dwellings have increased by 20% and purchases by 46%. Over this period, housing costs rose in 24 countries and fell in three.
Overview of price trends by country:
Increases
– Estonia – by 200%;
– Hungary – by 180%;
– Lithuania – by 146%;
– Latvia – by 132%;
– Luxembourg – by 126%.
Decreases
– Greece – by 14%;
– Italy – by 9%;
– Cyprus – by 2%.
Regarding rental prices, the highest increases were recorded in Estonia (+212%) and Lithuania (+165%). The only country where prices fell was Greece (-22%).
Dynamics of EU housing prices change
After 2020, housing prices in the European Union rose rapidly. In some countries, appreciation rates reached record highs. Since the fourth quarter of 2022, market growth has started to slow down. So far, analysts cannot say exactly how long the stagnation will last, but it has not affected all countries. Housing costs continue to rise in several European countries.
Falling house prices in early 2023 were most noticeable in Sweden, Germany, Finland and Denmark. At the same time, housing prices continue to rise in Cyprus, Portugal and Spain due to high demand from foreign buyers.
In the first quarter of 2022, analysts noted a sharp increase in the EU housing cost. The average increase was 10.4%. Then, against the backdrop of forecasts of rising inflation, many buyers decided to take advantage of the situation and buy property. In the following months, economic problems worsened, leading to a rise in interest rates. Rising mortgage costs and reduced purchasing power led to a significant slowdown in market activity.