Housing markets often reflect and impact on the broader state of the economy, especially in countries with a high home ownership ratio. Declining home prices mean declining housing wealth which can (and often does) mean lower consumer confidence and stressed balances of private households and their credit providers, usually banks. House prices will be an important factor in the ”health check” (asset quality review) for banks that will be carried out by the ECB next year.
Residential house prices in the Euro area as a whole where still falling in Q2 compared to 2012. However, prices slightly rose over the quarter. We interpret that as one of the many signs of stabilisation of the economy.
Economic trends differ widely between Euro area countries, and the same is true for changes in house prices. Macro-economic conditions are in place for a further rise in house prices in Germany. They seem also in place for further declines especially in Italy, Spain and the Netherlands. House prices also look elevated in France and (non-euro country) UK.
Read the full report: Economic Research
Nordea