Listen to the news

House prices in Europe are expected to fall in 2023 with no prospect of a significant recovery in the next three years as the market suffers from rising mortgage rates, ratings agency S&P Global has forecast, the Financial Times reported.

The rating agency cut its forecast for house price growth and now expects most European countries to see price declines this year, with levels ranging from a 0.5% drop in France to a 4.4% drop in Portugal.

House prices in Germany are expected to fall by 2% in 2023, while the UK is expected to register a larger decline of 3.5%.

"We forecast a decline in house prices in most European countries in 2023 and in 2024 for others, with the decline expected to be small but with no prospect of a strong recovery in 2025," Sylvain said. Breuer, chief economist for EMEA at S&P Global Ratings.

Mortgage rates rose across Europe after central banks raised interest rates as they grapple with very high inflation.

As a result, house prices and investment are likely to suffer.

Sylvain Breuer said it will take time for market prices and investment to adjust to the higher interest rates, and depending on their mortgage structure, some countries may take longer than others.

Bulgaria ranks second in the EU in terms of housing price growth in the third quarter of 2022.

"Such a downward correction can last up to 10 quarters and is usually twice as pronounced as after a low interest rate regime," Breuer said.

Earlier this week, official European statistics showed that house prices fell between the second and third quarters of 2022 in many European countries, including Germany, Denmark and Sweden.

However, Breuer pointed out that housing prices "will not collapse" because they will continue to be supported by limited supply, a strong labor market and high levels of household welfare, BTA notes.

Real Estate

housing