Even in Germany, where renting is traditionally popular, people have begun to give preference to buying apartments in the property. «We are tired of renting… now we will pay off the mortgage and eventually get a real asset… its value has already increased by about 7%», — the buyer of an apartment in a village in southwestern Germany told the British newspaper The Sunday Times.
The European real estate market remained booming during the pandemic, helped by a prolonged period of ultra-low interest rates and increased demand for larger housing, as many people were forced to spend a lot of time at home.
Despite the fact that the impact of COVID-19 on the European economy began to weaken, rents and housing prices continued to grow in the first quarter of 2022, increasing by 1.4% and 10.5% respectively over the year, according to data from the European Commission.
But can the housing boom in Europe finally come to an end? As the population faces an increase in interest rates on loans and a serious crisis associated with an increase in the cost of living, some experts believe that a slowdown is possible. The European Central Bank (ECB) warned in May that house prices could start to fall if mortgage rates rise faster than inflation.
According to ECB estimates based on the relationship between housing prices and incomes, the average house in the eurozone is overvalued by almost 15%, and in some countries - up to 60%.The European Commission reports that the cost of housing has increased in 24 of the 27 EU member states since 2010. The most significant growth was observed in Estonia, where prices jumped by 174%, followed by Hungary (an increase of 152%) and Luxembourg (an increase of 131%). Prices have more than doubled in seven EU countries since 2010.
The only EU countries where house prices declined were Greece (23%), Italy (10%) and Cyprus (8%). But at the same time, the cost of houses in Greece is still much higher than in 2018, before the sharp increase began during the pandemic.
Source: World Economic Forum