Many families in Europe are losing hope of home ownership due to high prices
As people’s expectation of “owning” gradually diminishes in Europe, where house prices and rents have skyrocketed due to the coronavirus pandemic, ongoing protests have led politicians to seek solutions .
The pandemic has raised concerns about social inequalities, financial instability and political polarization as more people are trapped in high rents in Europe.
According to Eurostat data, house prices in EU countries, as measured by the house price index, have increased by 30.9% since 2010.
In the first quarter of this year, house prices rose dramatically in EU countries as their economies struggled through hard times as a result of the pandemic.
Prices increased by 17% in Luxembourg, 15.3% in Denmark, 11.9% in the Czech Republic, 11.3% in the Netherlands, 9.4% in Germany, 5.5% in France and 6.7% in Belgium.
The first quarter figure was the biggest increase since mid-2007, while the European Central Bank (ECB) said that Germany, France and the Netherlands accounted for nearly three-quarters of the total increase in housing prices in the area last year.
Analysts said the low supply of housing, the influx of immigrants, the lowest interest rates on record, virus-induced savings are piling up and the growing desire to work remotely has accelerated the upward trend in house prices.
Wealthy institutional and private investors in Russia, Asia and the Gulf region are also driving up house prices with “high priced” offers.
Some countries, like Ireland, have also increased taxes, like the stamp duty, to prevent these investors from buying a large number of properties.
A number of politicians are reluctant to do too much to control prices so as not to harm existing owners.
Part of society is excluded from urban areas because it can no longer afford to buy apartments, Berlin mayor Michael Mueller noted.
“This is the case in London, in Paris, in Rome, and now unfortunately more and more in Berlin,” added Mueller.
Meanwhile, developments concerning the heavily indebted Chinese group Evergrande have reminded us of how difficult it is to “tame the market”.
Chinese leaders have taken steps to curb price hikes and curb borrowing, fearing that rising housing costs could cause disruption and increase risk to the financial system.
“Of course we have a real estate bubble,” said Reiner Braun, CEO of the Germany-based Empirica Research Institute.
The residential price index of Austria’s Oesterreichische National Bank (OeNB) has doubled over the past decade, reaching 245 points.
While the OeNB warns against “the growing overheating of the real estate market”, the average price per square meter of apartments in the capital Vienna is above 5,248 €.
With a house price index of 174.6 points, Germany is in the first group of the euro zone. Housing prices in the capital Berlin have increased 148% in 10 years while they have doubled in Frankfurt.
The average price of a property in Germany, including incidental costs, is around $ 500,000.
House prices in Sweden have jumped 14% on average over the past 12 months to reach 174.26 points.
The average price of a detached house in Stockholm is 8.5 million crowns (€ 830,000), while 4.7 million crowns (€ 470,000) must be paid to buy an apartment.
In Switzerland, the house price index reached 144.69 in the first quarter of this year, up 8% year-on-year due to lower construction and rapid growth in demand.
In some elite areas, prices per square meter are over 36,000 Swiss francs ($ 38,678).
The price of an average apartment in the UK has increased 60% since 2010 and 80% in London.
Real estate prices have increased on average by 22% in 10 years in France with prices per square meter in Paris exceeding € 10,000 ($ 11,593).