Despite the historical economic losses caused by the coronavirus pandemic, driven by low interest rates and high household savings, EU house prices rose at the fastest rate in nearly 14 years in the first three months of this year.
Data released by Eurostat on Thursday showed that the annual growth rate of house prices in the entire Eurozone in the first quarter was 6.1%, higher than the 5.8% in the previous three months, and the fastest growth rate since the third quarter of 2007.
House prices in the Eurozone grew by 5.8%, the fastest since the end of 2006.
In recent months, housing prices in most advanced economies, including the United Kingdom and the United States, have risen sharply, as major central banks have adopted unprecedented stimulus measures in response to the economic impact of the pandemic, driving a wave of liquidity in financial markets and Pushed up mortgage interest rates to record lows.
Ricardo Amaro, an economist at the Oxford Economics Institute, said that the “strong momentum” in EU housing prices may continue until the rest of 2021. Important factors.” Favorable interest rate environment and broader economic conditions rebounded strongly [the second quarter] forward. “
According to separate data from the European Central Bank, in the first five months of this year, the average mortgage interest rate for the entire Eurozone fell below 1.6%, the lowest level on record and lower than the 2008 peak of 5.7%. This not only means that more people are able to afford mortgage loans, but also that it is cheaper to buy than renting a house, which leads to an increase in the number of buyers.
Despite the economic damage, the financial situation of many families remained relatively healthy during the pandemic, thanks to the government’s support measures to keep people working, and the decline in consumer spending during the lockdown increased the savings rate.
As people seek more living space, the increase in working from home has also stimulated housing demand and triggered a wave of moving.
Capital Economics macro economist Jessica Hinds said that the price increase reflects the European Central Bank’s “very expansionary monetary policy, the government’s support for employment has largely protected employment and income, and the suspension of mortgage payments.” .
However, she added that this trend does not look like a real estate bubble. She said: “Valuation does not seem to have risen sharply, and residential investment does not appear to be a bubble.”
Among the major EU economies, Germany reported the fastest price increase at 9.4%; countries including Denmark, the Czech Republic and the Netherlands all recorded double-digit annual price increases.
In contrast, real estate price growth in Spain slowed to 0.9%, which is lower than the ten-year high of 7% in the third quarter of 2018.
These data were released a few hours before the European Central Bank released the results of its first strategic assessment in nearly two decades, which is expected to discuss the economic consequences of housing costs in a series of other issues.