EU house prices rise at fastest pace since 2007

EU house prices rose at the fastest pace in nearly 14 years in the first three months of this year.

Values were driven by low interest rates and high household savings despite the historic economic damage caused by the coronavirus pandemic. House prices across the union grew at an annual pace of 6.1 per cent in the first quarter, up from 5.8 per cent in the previous three months and the fastest pace since the third quarter of 2007, according to data published by Eurostat on Thursday.

House price growth for the euro zone, at 5.8 per cent, was the fastest since the end of 2006. House prices have risen sharply in recent months in most advanced economies as the unprecedented stimulus measures introduced by major central banks to combat the economic impact of the pandemic pushed a wave of liquidity into financial markets and drove mortgage rates to record lows.

Germany reported the fastest increase in prices among the EU’s big economies at 9.4 per cent; countries including Denmark, the Czech Republic and the Netherlands logged double-digit annual price growth. In the Republic, prices were recorded as growing by 3.1 per cent.

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In contrast, property price growth in Spain slowed to 0.9 per cent, down from a decade high of 7 per cent in the third quarter of 2018.

Momentum

Ricardo Amaro, economist at Oxford Economics, said the "solid momentum" in EU house prices was likely to continue for the rest of 2021, "supported by the extensive availability of excessive savings in segments of the market that are active in homebuying, a very supportive interest rate environment and a strong rebound in wider economic conditions from [the second quarter] onwards." – Copyright The Financial Times Limited 2021