Eurozone House Prices Decline by 1.1% in Q4 2023, Signs of Recovery Emerge

Latest data from Eurostat shows a 1.1% decrease in eurozone house prices, but Portugal sees continued growth, ranking 5th in the EU.

The latest data from Eurostat reveals that house prices in the eurozone have decreased by 1.1% in the last quarter of 2023 compared to the previous quarter. However, there are signs of recovery in the residential real estate market, as this decline is smaller than what was seen in the summer of 2023 (-2.2%). In Portugal, house prices continue to rise, with the country experiencing the 5th largest increase among EU countries.

According to Eurostat's statistical note, house prices in the eurozone fell by 1.1% in the fourth quarter of 2023, while they increased by 0.2% in the European Union compared to the same quarter last year. House rents in the EU also saw a 3% increase during this period. Despite this being the third consecutive annual drop in house prices in the eurozone, there is a slight recovery underway, possibly due to the market's optimism regarding the European Central Bank's planned interest rate cuts in June, which are expected to lower interest rates on housing loans. The recent decline in inflation in the eurozone to 2.4% further supports this easing of monetary policy.

Looking at the house price trends in the 26 Member States with available data, eight countries experienced a year-on-year decline in house prices, with Luxembourg (-14.4%), Germany (-7.1%), and Finland (-4.4%) seeing the largest drops. On the other hand, 18 EU countries saw increases in house prices, with Poland (13.0%), Bulgaria (10.1%), and Croatia (9.5%) leading the way. Portugal also saw a significant increase of 7.8% in house prices, ranking fifth among EU countries.

Compared to the third quarter of 2023, house prices in the euro area fell by 0.7% and by 0.3% in the EU in the fourth quarter of 2023, while house rents increased by 0.6% across the 27 Member States during the same period.

While there has been a slight decline in house prices in the eurozone, the residential market is showing signs of recovery, with Portugal experiencing significant growth in house prices. The upcoming interest rate cuts by the European Central Bank are expected to further support this recovery.