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European housing market no longer cools off

1120736018

According to new Eurostat figures, annual house price growth dynamics across the EU picked up further in Q3 2024. Although large differences between countries remain, the Q3 figures confirm that, overall, the European housing market has left the cooling behind. Countries that faced a major correction during the past two years (including Germany and Luxembourg) saw their house prices rise further in the third quarter, after already increasing in the second. In a number of countries that did not experience a cooling, price growth continued solidly in the third quarter (especially in Bulgaria). In Belgium, where the cooldown had remained relatively mild in recent years, prices rose further in Q3, after the small dip in Q2. Price dynamics accelerated there for existing homes. For new construction, the weaker Q2 and also Q3 figures in Belgium brought a welcome tempering, after the solid price rise in the previous three quarters.

Eurostat published house price figures for the third quarter of 2024 late last week. This is the 'harmonised house price index' for EU member states, which takes into account both existing and new homes and corrects for price changes that are purely due to changes in the characteristics of the property sold. The latter, compared to raw price figures, provides a better view of the real, underlying price dynamics in the housing market. The index, which is based on sales deeds, does measure the price evolution with some lag (typically several months) against the date when the sales price was fixed in a preliminary agreement.

In the EU as a whole, house prices rose by 1.4% in the third quarter compared with the previous one (1.5% for existing homes and 1.2% for new homes). The figure was slightly below the rate of increase in the second quarter (+1.9%) but was higher than that in the first (+0.6%). Compared to the same quarter a year earlier, house prices in the EU were 3.8% higher in Q3 2024, accelerating the annual rate of increase compared to Q2 2024 (+3.0%) and Q1 2024 (+1.5%).

Differences between countries

As in Q2 2024, there were still two countries with price declines in Q3 2024 compared to the previous quarter. At the peak in Q4 2022, there were 16. In Q3 2024, these were Estonia and Finland, with a quarterly decline that was limited to around 0.5% though. In Q3, as was the case in Q2, there were again quite a few countries with a solid price rise. In seven countries, the quarterly price increase was close to or above 3% (see figure 1).

On the positive side, countries that faced a strong correction in the past two years saw house prices rise further in Q3, after already recording an initial rise in Q2. These are Luxembourg (+0.2%), Germany (+0.3%), Sweden (+0.7%) and Austria (+0.6%). One exception is Finland: after a slight rise in Q2, prices there fell back in Q3 (-0.6%). France, where prices had also fallen considerably in recent years, still experienced a price fall in Q2 (-0.2%), but no more in Q3 (+1.5%).

Although this is not equally true for all individual countries, overall, the new Q3 figures again seem to indicate that the European housing market has left the cooling behind. That cooling occurred since Q3 2022 and implied an overall only minor price correction for the EU as a whole. Some countries did not even have a single negative quarterly figure in recent years. These are Croatia, Portugal, Greece, Malta, Bulgaria, Lithuania and Slovenia. 

The improving picture also emerges when looking at the annual change in house prices across countries. The annual cahnge is much less volatile than the quarterly change and thus gives a better picture regarding ongoing price dynamics. Figure 2 shows that the number of EU countries with an annual price fall has further decreased in Q3 2024 to just four, with no country with a price fall of more than 5%. More countries (now 16) also experienced an annual price increase of more than 5% in Q3 2024. In some of these, which have not experienced a cooling, house price growth has been so strong in recent years that there may be an exaggeration. Especially in Bulgaria and Poland, where price growth remained strong even in Q3, that risk is present (see figure 3). 


As in most EU countries, Q3 2022 was also a tipping point in house price dynamics in Belgium. Compared to the EU as a whole, however, the cooling in Belgium was slightly milder. The resumption of price growth after several quarters of slight decline followed somewhat earlier in Belgium than in the EU, starting from Q3 2023. It was slightly weaker again in the first half of 2024, but picked up further in Q3 2024. The somewhat earlier rebound was due to the again robust price rise for new houses, which did stagnate again in the course of 2024 (figure 4). The again weak Q2 and Q3 figures for new construction brought a welcome tempering, after a cumulative price rise of as much as 8% between Q2 2023 and Q1 2024. The price recovery of existing homes since Q2 2023 was more moderate, but accelerated in Q3 2024.

Disclaimer:

Any opinion expressed in this publication represents the personal opinion by the author(s). Neither the degree to which the hypotheses, risks and forecasts contained in this report reflect market expectations, nor their effective chances of realisation can be guaranteed. Any forecasts are indicative. The information contained in this publication is general in nature and for information purposes only. It may not be considered as investment advice. Sustainability is part of the overall business strategy of KBC Group NV (see https://www.kbc.com/en/corporate-sustainability.html). We take this strategy into account when choosing topics for our publications, but a thorough analysis of economic and financial developments requires discussing a wider variety of topics. This publication cannot be considered as ‘investment research’ as described in the law and regulations concerning the markets for financial instruments. Any transfer, distribution or reproduction in any form or means of information is prohibited without the express prior written consent of KBC Group NV. KBC cannot be held responsible for the accuracy or completeness of this information.

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