House prices in most European markets are continuing to rise but at a slower pace than last year, indicating that real estate may be headed for some tough times amidst rising interest rates and soaring energy costs, according to industry data.
In the second quarter of the year, house prices rose in 20 of the 28 European housing markets for which figures were available in Q2 2022, according to figures put together by Global Property Guide and adjusted by GreekGuru.net.
“Yet only 7 countries had stronger momentum in Q2 2022 compared to a year earlier.” adds Global Property Guide.
Greece is one of those countries. The latest figures from the Bank of Greece, the country’s central bank, shows that house prices jumped by 9.4 percent last year, versus gains of 6,9 percent in the same quarter of 2021.
Inflation distorts prices
Although this looks like price growth accelerated in the 12-month period, this is not the case when the data is adjusted for inflation (or deflation, as was the case last year).
When adjusting for core inflation - which strips out energy and food prices - the real price hikes in Greece's residential property market in the second quarter of 2022 reach 6.7 percent versus, or 8.1 percent in the second quarter of 2021.
Housing boom slows in Europe
Key European markets such as Germany and the UK are losing steam while Spain and Italy’s real house prices are now falling.
In Spain, home prices fell by 6.3 percent in the second quarter of the year (adjusted for headline inflation), versus gains of just over 7 percent a year earlier, the data showed.
Despite the weak performance in the real estate market, however, Spain’s economic growth remains robust and is tipped to grow by 4 percent this year.
Meanwhile in Turkey, inflation is also playing havoc with prices.
“Turkey remains the strongest housing market in our global house price survey, buoyed by strong demand from both local and foreign investors,” said Global Property Guide.
“The nationwide house price index rose by a spectacular 45.88% during the year to Q2 2022, far higher than the previous year’s 9.97% y-o-y increase and its best showing in recent history. In fact, in nominal terms, prices skyrocketed by more than 160%,” it added.