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The median price of a home across the European Union’s 27 member countries rose 6.1 percent in this year’s first quarter, the union’s statistical agency Eurostat reported, a pace faster than at any time since the third quarter of 2007.
Home prices among the 19 countries sharing the euro currency climbed 5.8 percent, the speediest rise since 2006.
Prices shot up by double digits in the Czech Republic, Denmark, and the Netherlands; home prices in Germany rose 9.3 percent.
In Spain, the price of a house rose only 0.9 percent, compared to its ten-year high of 7 percent struck in 2018’s third quarter.
As in the U.S., Europe’s home prices have risen due to a confluence of government stimulus money, record low interest rates, and working from home as the new normal, the Financial Times said.
The Eurozone’s average mortgage rate fell to 1.6 percent during the first five months of this year, the lowest on record and down from a peak of 5.7 percent in 2008, the European Central Bank reported.
Lower rates allow more people to qualify for mortgage loans, drawing more people into the market and bidding up prices.
The surging prices are fueled by the European Central Bank’s “very expansionary monetary policy, government support for jobs that has largely protected employment and incomes, and the imposition of moratoria on mortgage payments” during lockdowns, Jessica Hinds, an economist at Capital Economics, said in an FT interview.
The continent’s home prices will keep ratcheting up at least for the rest of this year, “supported by the extensive availability of excessive savings” among prospective buyers, “a very supportive interest rate environment, and a strong rebound in wider economic conditions,” economist Ricardo Amaro at Oxford Economics told the FT.
TREND FORECAST: Again, as we have noted in this Trends Journal, with nations imposing new lockdown mandates and travel restrictions—depending on the extent of these rules to fight COVID War 2.0—this will in turn push economies lower.
And unlike the first round of the COVID War when it was new and the implication unknown, this time around consumers will respond differently to what they buy, want and do … in the New ABnormal world of fear and hysteria.