The European Commission's spring economic forecast, quoted by RTP, highlights the upward trend in real estate prices, pointing out that “after falling in the second and third quarters of 2023, property prices rose again in 2024”.
“The recovery in prices was accompanied by a recovery in transactions, to a level comparable to that recorded in the pre-pandemic years,” Brussels points out, adding that in the fourth quarter of 2024, nominal house prices in the EU were 4.9% higher than the previous year, surpassing the peak of mid-2022. In real terms, the increase in prices was more modest, but still stood at 2.1% over the year.
Among the various countries, the magnitude of the increase varied significantly, with Bulgaria, Hungary, Portugal, Spain, the Netherlands, Poland and Croatia recording annual growth rates of more than 10% in the fourth quarter of 2024, the Commission points out.
Portugal was thus the third country in the European Union with the highest annual increase, with house prices rising by 11.6% at the end of last year
The European Commission also points out that home buyers are currently facing high prices that are out of line with their debt capacity. Since the pandemic, the relationship between property values and household disposable income has worsened sharply across the European Union.
In most EU countries, the increase in real house prices has outstripped household borrowing capacity over the last five years, “highlighting the growing difficulties for households in acquiring housing through credit”. In Portugal, household debt capacity, adjusted for inflation, fell by around 25% but house prices rose between 2019 and 2024.
Even so, Brussels anticipates an improvement in household debt capacity in the European Union in 2025 and 2026, driven mainly by rising incomes. The Commission expects real wages to grow by 1.6% this year and 1.1% next year, contributing to this financial relief.
Image credits: ©Jakub Zerdzicki | Unsplash
Translated with DeepL.com (free version)
