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House prices fell in the EU.

 

House
House prices in the EU have suffered their first quarterly fall since 2015, as rising bor­row­ing costs bring an end to a boom in res­id­en­tial prop­erty mar­kets.

Euro­stat, the EU stat­ist­ics office, said yes­ter­day house prices dropped 1.5 per cent in the final three months of 2022 after declines in 15 of the bloc’s 27 coun­tries. The biggest was in Den­mark and Ger­many, where house prices fell 6.5 per cent and 5 per cent, respect­ively.

Dutch house prices fell 1.5 per cent between Janu­ary and Feb­ru­ary, said fig­ures from the national stat­ist­ics agency CBS last month.

There were some bright spots, such as Croa­tia, where rising demand from for­eign buy­ers ahead of the coun­try’s intro­duc­tion of the euro in Janu­ary drove house prices up by 4.7 per cent in the final quarter of last year.

But the surge in house prices over the past dec­ade has now gone into reverse in much of the EU. As a result, the ECB last month raised its deposit rate by half a per­cent­age point to 3 per cent, tak­ing bor­row­ing costs in the euro­zone to their highest since the 2008 fin­an­cial crisis, and some poli­cy­makers have said another rise is likely in May.

Banks have tightened credit con­di­tions in response, and ana­lysts say they could retreat fur­ther after the tur­moil of the past month in the sec­tor, triggered by the col­lapse of Sil­icon Val­ley Bank in the US and the forced sale of Credit Suisse to its rival, UBS.

«We are likely to see a fur­ther increase in banks’ cost of fund­ing, a tight­en­ing of credit stand­ards and a decel­er­a­tion in the growth of lend­ing volumes,» Luis de Guin­dos, vice-pres­id­ent of the ECB, said in a speech at the week­end.

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