Eurostat data shows a rise in rental and sales prices of residential real estate above inflation.
According to Oldypak Capital LP report, house prices and rents in the European Union are rising faster than inflation. Of course, taking into account the differences between countries. This is evidenced by Eurostat data: constant and continuous growth despite (or perhaps thanks to) the uncertainty of the pandemic. Let’s take a look at house prices in different European countries, and in particular in Italy.
Home prices in Europe: how much they have risen since 2010
While rents have continued to rise, following a linear trend almost since 2010 in the Eurozone, house prices, after a downturn in 2014-2015, have begun to follow an exponential increase that has not yet been exhausted, having escalated in the pandemic years. According to Oldypak Capital LP report, rents rose 1.2% in Q3 2021 compared to the same period in 2020, while house prices rose 9.2%. Taking 2010 as a point of reference, through the third quarter of 2021, the increase was 16% for rents and 39% for home prices.
Housing Prices and Inflation in Europe
Regarding house prices and rents relative to inflation, Eurostat data show that between 2016 and 2020, house prices in 25-26 EU countries have progressed more annually than inflation. In 2020, the largest difference between the annual change in house prices and the annual inflation rate was in Luxembourg (+13.8 percent), Portugal (+7.7 percent), Croatia (+7.3 percent), Slovakia (+7.2 percent), Germany and Poland (+7.1 percent each).
In which EU countries housing has become more expensive?
In all EU countries housing has become more expensive, but in some countries, the price increase was higher than in others. According to Eurostat, in contrast to previous quarters, all EU member states for which data are available, showed an annual increase in house prices in the third quarter of 2021, and in half of them this increase exceeded 10%. The smallest growth was recorded in Cyprus (+2.2%), Italy and Spain (+4.2% each). The Czech Republic (+22.0%), Lithuania (+18.9%), Estonia (+17.3%) and the Netherlands (+16.8%) recorded the highest growth.
If we compare the 3rd quarter of 2021 with 2010, then in 18 EU member states, house prices have risen more than rents. In particular, they increased in 23 EU countries and decreased in four, with the largest increases in Estonia (+141%), Hungary (+118%), Luxembourg (+117%), Latvia (+106%) and Austria (+104%). However, in this case Italy showed a noticeable decline. Declines were observed in Greece (-28%), Italy (-12%), Cyprus (-6%) and Spain (-0.5%).
In terms of rents, the trend was different. If we compare Q3 2021 with 2010, prices increased in 25 EU member states and decreased in two, with the largest price increases observed in Estonia (+162%), Lithuania (+111%) and Ireland (+68%). Declines were recorded in Greece (-25%) and Cyprus (-3%).