Post by account_disabled on Mar 14, 2024 1:50:52 GMT -5
The adjustment of housing prices in Europe is not over yet . This is the main reading that can be extracted from the latest report published by the Swiss manager J. Safra Sarasin.
According to Karsten Junius, chief economist at J. Safra Sarasin Sustainable AM, the decrease has been caused by the increases in interest rates that central banks are applying to fight inflation and its impact on the mortgage market. And this restrictive monetary policy will continue to impact demand and prices in the residential market.
“Real estate prices have fallen recently in most Phone Lead eurozone countries. “We calculate that the increase in mortgage rates has reduced the accessibility of homes to a point that would justify further price reductions ,” states the economist.
Another of its forecasts is that construction activity will continue to reduce in the main European countries due to the sharp increase in construction costs, which will probably cause, according to the report, “a serious mismatch between sales prices and offer prices.” ”. Regarding the rental market, the forecast is that rents will continue to rise.
Junius gives as an example the cases of Switzerland and Germany, where property prices reached maximums in 2022.
For example, Switzerland has seen the steepest decline in residential property prices since the start of the official data series in 2019, according to the country's Federal Statistics Office. In the first quarter alone, the average drop was 1.2%, although in the case of single-family homes it was 1.3%. Rural areas were the most affected by the declines.
“Prices have declined as mortgage rates have risen around 1 percentage point since early 2022 for most maturities and despite an increase in construction costs. The Bank for International Settlements (BIS) estimated that by the end of 2022, house prices in Switzerland were at historic highs in nominal and real terms, as well as relative to real GDP per capita. Even so, prices are 17% above the levels recorded at the beginning of 2019,” the document highlights.
In the case of Germany, the evolution has been similar. After hitting highs in the second quarter of 2022, real estate prices are falling. In the first three months of this year, without going any further, they fell by 2.3% in quarterly terms, according to the association of German banks VDP, after “mortgage rates increased by 2.5 percentage points since the beginning of 2022, more than double the increase seen in Switzerland. Construction costs also rose sharply: 15.1% year-on-year in March or 31.5% accumulated since January 2021.” Therefore, the economist emphasizes, “it is not surprising that expectations in the construction sector are at an extremely low level.
According to Karsten Junius, chief economist at J. Safra Sarasin Sustainable AM, the decrease has been caused by the increases in interest rates that central banks are applying to fight inflation and its impact on the mortgage market. And this restrictive monetary policy will continue to impact demand and prices in the residential market.
“Real estate prices have fallen recently in most Phone Lead eurozone countries. “We calculate that the increase in mortgage rates has reduced the accessibility of homes to a point that would justify further price reductions ,” states the economist.
Another of its forecasts is that construction activity will continue to reduce in the main European countries due to the sharp increase in construction costs, which will probably cause, according to the report, “a serious mismatch between sales prices and offer prices.” ”. Regarding the rental market, the forecast is that rents will continue to rise.
Junius gives as an example the cases of Switzerland and Germany, where property prices reached maximums in 2022.
For example, Switzerland has seen the steepest decline in residential property prices since the start of the official data series in 2019, according to the country's Federal Statistics Office. In the first quarter alone, the average drop was 1.2%, although in the case of single-family homes it was 1.3%. Rural areas were the most affected by the declines.
“Prices have declined as mortgage rates have risen around 1 percentage point since early 2022 for most maturities and despite an increase in construction costs. The Bank for International Settlements (BIS) estimated that by the end of 2022, house prices in Switzerland were at historic highs in nominal and real terms, as well as relative to real GDP per capita. Even so, prices are 17% above the levels recorded at the beginning of 2019,” the document highlights.
In the case of Germany, the evolution has been similar. After hitting highs in the second quarter of 2022, real estate prices are falling. In the first three months of this year, without going any further, they fell by 2.3% in quarterly terms, according to the association of German banks VDP, after “mortgage rates increased by 2.5 percentage points since the beginning of 2022, more than double the increase seen in Switzerland. Construction costs also rose sharply: 15.1% year-on-year in March or 31.5% accumulated since January 2021.” Therefore, the economist emphasizes, “it is not surprising that expectations in the construction sector are at an extremely low level.