Euro­pean home prices re­cov­er­ing, says ECB

Financial Mirror (Cyprus) - - FRONT PAGE -

The Euro­pean Cen­tral Bank (ECB) pub­lished an Tues­day morn­ing on the state of hous­ing prices eu­ro­zone.

The re­cov­ery has not been par­tic­u­larly ro­bust so far, but hous­ing prices are mov­ing up across sev­eral eu­ro­zone mem­bers.

The ECB noted that the an­nual rate of change in house prices be­gan to in­crease in mid-2013 and had turned “mildly pos­i­tive” in the sec­ond half of 2014. A sim­i­lar pat­tern oc­curred in 2009 and 2010, how­ever the sov­er­eign debt cri­sis stopped fur­ther progress.

The re­port cites sev­eral rea­sons to be­lieve that this turn­around is more likely to suc­ceed: “House price in­creases ap­pear to be rel­a­tively broad-based across groups of coun­tries.

“Price in­creases seem to be less con­tin­gent on prices in metropoli­tan ar­eas.

“The re­cov­ery is tak­ing place in ar­eas im­bal­ances have al­ready seen sub­stan­tial hous­ing prices.

“In ad­di­tion to a more bal­anced start­ing point than in 2009 to 2010, the cur­rent re­cov­ery is be­ing sus­tained by two fac­tors: bank lend­ing rates and credit stan­dards have be­come more favourable, and the low in­ter­est rate en­vi­ron­ment could fur­ther sus­tain de­mand and boost hous­ing prices.”

That said, how­ever, the ECB also notes: ar­ti­cle in the where ear­lier cor­rec­tions in

“The cur­rent euro area real house price up­turn has been some­what weaker than the typ­i­cal in­crease ob­served his­tor­i­cally dur­ing the ini­tial phase of the up­turn. … In­deed, since the latest euro area trough in 2013, only some coun­tries (such as Ger­many) have seen an up­turn in real house prices, while in oth­ers (such as Spain and the Nether­lands) there has only been a broad sta­bil­i­sa­tion fol­lowed by a mild in­crease in prices, or even a fur­ther de­cline (as in France and Italy). … The most re­cent house­hold loan de­vel­op­ments only seem to have her­alded, so far, a rel­a­tively mod­er­ate in­crease in real house prices in the short to medium run.”

The bet­ter news, though, is that the col­lapse and re­cent re­cov­ery in hous­ing prices in the eu­ro­zone are “in line with his­tor­i­cal cycli­cal pat­terns,” even if the re­cov­ery has been weaker than nor­mal.

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