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The eurozone housing markets!

While all eurozone economies experienced significant economic contractions in 2020, the effect on residential real estate prices was varied. Development slowed in some countries while it accelerated in others. Here's a rundown of several major innovations.

Germany: Prices are expected to rise even further. ارض

House prices in Germany don't seem to be leveling off any time soon. In 3Q20, the year-on-year change in the statistical office's house price index was 7.8%, the highest level since 2016. (8.4 percent in 4Q). The rise was mostly driven by existing house prices, which corresponds to monthly price data from home sales, which has only dipped below 10% YoY on a few occasions since mid-2019.

Existing homes are driving the price rise, indicating that hotspot cities with restricted building space are still the driving force behind the prices. So far, predictions that the pandemic will delay or even reverse house price growth haven't come true.

Prices are expected to rise further as a result of record levels of savings, mostly by wealthy consumers, and low interest rates.

Property prices in France are expected to increase by 1.5 to 2%.

Despite the lockdowns and a 12-week ban on property visits, the French residential property sector remained buoyant in 2020.

Prices rose 4 to 5% year over year, but the pace will slow in 2021 as the crisis's long-term effects, especially on the labor market and household purchasing power, become apparent. Price rises could be limited if macroprudential regulations are tightened.

At the same time, the construction sector's closure during the first lockdown, as well as a drop in productivity in 2020, are likely to put downward pressure on the availability of new housing. This is likely to put downward pressure on new home prices, especially as new environmental regulations take effect this year, raising construction costs.

Property prices are expected to grow by 1.5 percent to 2 percent this year, slightly less than in 2020. As has been the case since the end of 2020, we foresee less dynamism in big cities than in medium-sized cities.

In 2021, Italy will experience a slight contraction.

In 2020, the pandemic and the 8.9% GDP contraction had only a minor effect on the Italian housing market.

During the first wave, the implementation of labor market support programs helped to support disposable income, although banks did not tighten credit standards, aided by state guarantees on a portion of their new assets. Despite the fact that sales were shrinking steadily, house prices remained stable for the majority of the year, rising by 1.5 percent on average over 2020.

Over the course of 2021, we anticipate a slight decrease in average rates

The extension of labor market support schemes and the ban on layoffs should provide support in 2021, but their possible expiration in the second half of the year will increase caution. The scope of a year-end rebound in transactions and prices is strongly influenced by the vaccination program.

Over the course of 2021, we anticipate a modest decrease in average prices.

In 2021, Spain's price growth will be mild.

In 2020, house price growth slowed dramatically. According to Eurostat's house price index, house prices will increase by 2% in 2020, compared to 5% in 2019 and 7% in 2018.

Given the upcoming difficult economic environment, we expect price growth to slow in 2021, but not to fall sharply. The effect of this recession on Spanish residential real estate appears minor as compared to the financial and eurozone crisis (when prices fell by 35 percent between 2007 and 2014). However, business pillars are much stronger today than they were in the past.

The financial condition of households and businesses in the sector was better at the start of 2020 than it was in 2008. There was also no building boom prior to Covid-19, as there had been prior to the financial crisis. Furthermore, mortgage rates are projected to stay stable. Brexit is one thing that could put more downward pressure on the market.

Britons will only be able to remain in the EU without a visa for 90 days within a 180-day period starting in 2021, resulting in lower demand for Spanish homes by Britons. However, it is possible that more homes owned by Britons will be put on the market, especially on the Costa del Sol and Costa Blanca.


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