Signs of slowdown in house prices across eurozone as interest rates rise
Houses Ireland Week 7% At Said Overvalued In This The That Esri Were Least
Rents and house prices in the European Union continued to rise in the second quarter, official figures show, but there are signs the pace of house price inflation has slowed as the European Central Bank hiked interest rates.
Eurostat said across the EU in the three months to June that rents went up 1.7% and by almost 10% from a year earlier.
In Ireland, both rents and house prices have risen sharply, the latest figures from the Central Statistics Office figures have shown. In the summer months, house prices had risen 13% from a year earlier and rents were up by a similar size, by 12.7%.
That led to the Economic and Social Research Institute, or ESRI, warning earlier this week that houses in Ireland were at least 7% overvalued above their fundamental value.
Its analysis suggests built-up savings during the pandemic have boosted house prices here and that some sort of significant moderation in house price growth will likely occur. It is unclear whether house prices will fall, the ESRI said.
The latest Eurostat figures show house price inflation in the eurozone slowed in the second quarter for the first time in two years as the war in Ukraine dented confidence and quickening inflation pushed the ECB to abandon its longstanding cheap money policy.
House prices rose 9.3% from a year ago in the second quarter, down from 9.8% in the previous three months, Eurostat said. Prices growth also cooled in the broader European Union, with the smallest gains recorded in Cyprus, Finland and Denmark.
After housing markets remained buoyant during the Covid-19 pandemic, rising borrowing costs and a spike in living costs are now threatening demand. Factors including a greater desire for bigger properties that allow work from home may, however, offer some support, ECB researchers said last month.
The Eurostat figures again show Irish rents and house prices have climbed sharply since the 2010 property crash.
Eurostat said when comparing the second quarter of 2022 with 2010 for rents, prices increased in Estonia by 214%, in Lithuania by 139%, and by 82% in Ireland. House prices more than doubled in Estonia, Hungary, Luxembourg, Latvia, Lithuania, Czechia, and Austria.
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