House prices fell in the EU.

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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