_Europe 10 years on...
The last decade saw prices slide lower, before a more recent recovery. In many housing markets construction slowed to a virtual halt, in some interest rates entered negative territory, a stimulus of €2.4 trillion was injected into the Eurozone economy and tighter lending rules were imposed. With a number of European cities now firmly in recovery mode this report delves deeper into the data to understand where the future opportunities lie.
Of all the world regions, Europe’s housing markets were arguably hit the hardest by the global financial crisis, in part because in 2007/08 some of its key economies – including the UK, Spain and Ireland – were building homes at their fastest rate on record and lending was at its peak.
However, 2017 marked a turning point – a year when Europe’s recovery came into focus and this improved sentiment has continued into this year.
The fact Greece exited its €86 billion bailout programme this summer is testament to how far the region has come over the last decade.
Knight Frank’s Global House Price Index, confirms that prices across Europe are rising at an average rate of 5.3% per annum, up from a low of -4% in the final quarter of 2009. In addition, residential transactions across the region are up 21% since their low in 2012 according to the European Mortgage Federation (figure 4).
Buyer sentiment amongst owner-occupiers has strengthened as the region’s economic outlook has improved. The latest data show GDP growth across the EU-28 reached 2.2% in the 12 months to Q2 2018 with employment, wages and consumer spending all on an upward trajectory (figure 2).
"However, it is not just owner-occupiers who have been buoyed by the upturn in the region’s economic fortunes, cheap finance and rising rental demand has meant investors are looking at residential markets across Europe’s cities with renewed interest. "
That said, the region’s performance both now and over the last decade is polarised. As the map above illustrates, not only have most key cities outperformed their wider national housing markets but some countries were largely unaffected by the financial crisis (Austria, Germany) whilst average prices in others still sit below their pre-crisis peak (Spain, Italy, Ireland).
In this report we assess how far Europe’s housing markets have come. We set out the current and future housing market indicators for 14 of the region’s main cities and outline how the landscape is changing, assessing the likely risks and opportunities for this diverse set of urban residential markets.
Despite the headwinds, cities look set to outperform as they become the hubs for innovation, knowledge-sharing and creativity. Across the EU-28, 73% of the population live in either cities, towns or suburbs. By 2050, the United Nations forecasts this figure will exceed 80% bringing with it significant repercussions for housing affordability, transport and social infrastructure.
Read the report in full here
For more information please contact Kate Everett-Allen