European Central Bank
Economic Bulletin November 2021

Real estate market trends in Europe

In its latest Economic Bulletin from November 2021, the European Central Bank (ECB) analyzes past trends and future expectations related to housing demand based on its new Consumer Expectations Survey (CES).

Main takeaways from the ECB based on its new Consumer Expectations Survey (CES): 

  • Financial and income situation: The intention to buy a house/flat differs according to household income. According to the CES data “higher income households are much more likely to intend to buy a house or flat in the next 12 months than lower-income households” and are therefore likely to provide stronger support for housing demand.

  • The amount of accumulated savings, or savings behaviour in general, play a key role in the housing market.  Accumulated savings have already been used for house purchase, and they may still boost housing demand over the near term.  By March 2021, “Net dissavers” generally had the highest share of home buyers in the past 12 months. According to the ECB, this suggests that some households are “net dissavers” because they have paid for house purchases. Looking forward, net savers had the highest share of expected house buyers. Hence, although some transactions driven by excess savings during the pandemic may have already materialised, the large stock of accumulated savings may still boost housing demand over the near term. About 44% of net savers declare that “a desire to put aside enough money to make a major purchase in the future (e.g. house, car, etc.)” has been an important or very important reason for accumulating savings since January 2000.

  • Mortgage credit conditions and housing price expectations are also very relevant: Expectations for credit conditions and housing prices point to a dynamic housing market. As factors increasing housing demand, CES respondents pointed to, among other things, expectations of easier access to credit in the future and declining mortgage rates. At the same time, in the period between April 2020 and May 2021, respondents almost continuously increased their expectations for house price growth and the attractiveness of housing as an investment has increased since the start of the pandemic.

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