Nataly Kambur
2012 was a controversial year for the European housing market. While some European markets were rallying, others were dominated by the bears. Obviously, investors wonder where housing price will go this year.
According to the recent research conducted by GlobalPropertyGuide.com, the bearish tendency seen in most European housing markets last year will continue this year as well.
Obviously, the list of those countries includes crisis-ridden eurozone economies like Greece, Portugal , Spain . Other European countries are the Netherlands, Croatia, Lithuania etc. The internet sources analyzed the situation in the housing markets of 23 European countries. Only 9 of them managed to show a bullish tendency. Others showed lower housing prices.
Prior to making forecast for the European housing market, let’s have a look at its performance in 2012.
European Housing Market: Ups and Downs
According to the research, the Greek housing market was the biggest loser in Europe – 12.47% in a year. Spain turns out to be the second biggest loser in terms of housing prices. The decline reached 11.87% last year. Bulgaria was number 3 with a 6.84% (y/y) decline.
It should be noted that some EU housing markets strengthened. In particular, Turkish residential property appreciate by 4.96% during the same reporting period. This can be considered outstanding performance.
As for the elite residential property, the most stable housing prices in Europe are in France, Switzerland and Italy. Europe’s major cities – London and Paris – are also showing stable housing prices.
At the same time, analysts anticipate higher interest in project owned by major international hotel operators.
European Residential Property: Controversial Situation
Analysts expect eurozone economies to count losses and settle accounts with lenders. Budget deficit are expected to show gradual reduction. Eventually, housing markets will start recovering. However, the do not specify the terms as the current uncertainty and instability caused by the eurozone crisis makes it next to impossible to make specific forecasts.
Obviously, the situation varies (and will vary) from country to country. As for the forecasts for this year, analysts expect most European housing markets to continue their bearish trend in 2013. The only gainers may be Germany, Latvia and Turkey.
At the same time they are sure that Spain , Italy and Greece will eventually become the biggest losers in terms of housing prices this year.
Italy. Obviously, Italian resorts won’t see any housing price decline. The rest of the market may see a decline, thereby making the sellers to wait till the market recovers. Realtors say that Italian elite residential property is seeing higher demand as foreign investors are more willing to invest in it. For reference sake, the Italian housing market managed to avoid price bubbles before the 2008 global crisis (unlike some other European markets).
Analysts say that the Italian housing market will show a bearish tendency due to multiple economic problems. For reference sake, Italy’s public debt is the world’s 4th biggest debt.
France. As for the French housing market, it is stagnating this year, analysts report. According to Eugene Olkhovsky, ’s leading experts in financial markets, French housing prices has dropped this year and may show a further decline (up to 5%). All those who are willing to purchase French residential property should keep in mind that the French government is planning to cancel the “loi Scellier” law which implies refund for those buyers of new homes who will lease it. This step may decrease the demand for French property. In this case, most sellers will wait for better times.
Spain . Most experts are sure that the bearish tendency will keep dominating the Spanish housing market over the next 2-3 years. Within the next 2 years, housing prices are expected to drop by 28%. As for 2013, the price decline is expected to be between 3% and 12%.
Great Britain. Elite residential property in London and other big British cities is not going to depreciate. Still, experts are afraid of making long-term forecasts for the British housing market. For reference sake, in 2013 elite London property appreciated by 3.5% while residential property in smaller cities depreciated by2%.
Germany. Experts say that Germany is an island of relative stability and calmness in the European ocean of uncertainty and crises. According to local realtors, housing and rent prices in Germany will grow by 10% or more in 19 out of 25 major German cities this year.
Bulgaria. The local housing market has been weakening. Therefore, experts anticipate stabilization in the Bulgarian housing market. Bulgaria has a major problem connected with scam contractors. Therefore, local courts are full of claims against “dirty” construction companies.
Slovenia. Is one of the so-called emerging housing markets in Europe in terms of investment attractiveness. Experts anticipate a 15% rally in the local housing market this year.
It is interesting to have a look at Europe’s construction activity. According to Experian, a global information services group with operations in 44 countries, there was a 2.1% construction decline in Europe (19 countries were taken into account). Experian forecasts a 0.4% and 1.7% increase in the amount of new housing units in 20013 and 2014 correspondingly.
Summing Up
Most experts share the same opinion: 2013 won’t be a bullish year for the European housing market in general. Therefore, it is better to wait till housing prices go further down, thereby making housing units more affordable and undervalued and turning them into bargains.
This is not the right time to benefit from re-selling residential property at a higher price. This option will become available in the long run. Those who own European residential property are recommended to lease it, which is a good option for generating extra income till the situation improves.
Nataly Kambur
