According to Eurostat, residential property prices in the eurozone have started to rise for the first time in more than a year. This confirms the expectations of property market experts, who predicted a revival of the sector amid falling interest rates. In the second quarter of 2024, prices increased by 1.3% compared to the same period last year, which was a turning point after four quarters of decline. In the European Union as a whole, prices increased by 2.9% year-on-year.
In the first quarter of 2024, prices fell by 0.3% in the eurozone, while they rose by 1.5% in the EU. In the second quarter, residential property prices in the eurozone increased by 1.8% compared to the first quarter, and by 1.9% in the EU.
Among EU countries, six countries saw a decline in prices, while twenty countries saw an increase. The largest decline was recorded in Luxembourg, down 8.3% year-on-year, while the largest increase was in Poland, where prices rose by 17.7%.
In Germany, which has been experiencing a historic decline in property prices for seven quarters, Q2 2024 saw a 1.3% increase compared to the previous quarter, although prices fell 2.6% year-on-year. However, current prices remain around 12% below 2022 levels.
The European residential property market has seen a sharp decline in demand in recent years, driven by rising borrowing costs since early 2022 as a result of the European Central Bank’s (ECB) tight monetary policy. However, mortgage rates have started to decline in 2024, driven by expectations of a looser ECB monetary policy. The ECB cut its key rates twice in June and September this year, setting them at 3.5%. Another cut is expected, possibly as early as October.
According to data published by the ECB, the average interest rate in August The rate of new mortgages was 3.7%, down from 4% in November last year. Despite the decline, mortgage rates remain high compared to January 2022, when they were 1.3%.
Analysts note that further growth in residential property prices will be moderate, as the market has already priced in the ECB’s interest rate cuts, which in turn has driven down mortgage rates.
