Experts Forecast Record Rise In Real Estate Prices In Europe
Growth in home prices in the single European currency region in 2021 will break a 30-year record, according to a note by the UK analyst firm Oxford Economics.
The pace of house price growth in the eurozone is steadily accelerating despite the pandemic. « We believe 2021 will be the strongest year in terms of house price growth in 30 years, » the note reads.
Growth could accelerate to 8% year-over-year in the fourth quarter of 2021, which would be a thirty-year high. At the same time in 2020 a record quarterly price growth was set for the last 25 years.
Overall, home values are expected to rise by more than 7% for the current year. Oxford Economics raised that forecast from less than 6% expected in July. « We also raised our estimate for 2022 to more than 6% from less than 3%, » the note reads. Key factors driving this price boom include, among other things, easy financial conditions for home purchases.
« The favorable situation on the demand side should continue into 2022, supported by strong demand for owner-occupied housing, the accumulation of excess savings and a rapid labor market recovery. It’s also likely that interest rates (on loans) will rise from record lows only very gradually, » the note says.
Oxford Economics expects the pace of home price growth to slow over the medium term as interest rates rise and supply increases.