Despite declines in key countries, EU house prices rise in the first quarter of 2024, driven by strong growth in Poland, Bulgaria and Lithuania.
In the first quarter of 2024, house prices in the euro area saw a slight drop of 0.4%, while in the European Union as a whole they rose by 1.3% compared to the same period in 2023. This data, provided by Eurostat, reveals a mixed picture for the European property market, with some countries showing sharp declines and others recording solid growth.
In context, in the previous quarter (Q4 2023), house prices had fallen by 1.2% in the euro area and barely rose by 0.2% in the EU. Comparing Q1 2024 with Q4 2023, house prices fell by 0.1% in the euro area, while in the EU they increased by 0.4%.
Trends in EU Member States
Analyzing year-on-year variations across EU member states, seven countries experienced a decrease in house prices during the first quarter of 2024, while nineteen showed an increase. The steepest falls were recorded in Luxembourg (-10.9%), Germany (-5.7%) and France (-4.8%). These declines reflect broader economic challenges in some of the EU's largest economies, especially against a backdrop of inflation and rising interest rates that continue to impact the property market.
On the other hand, the largest annual increases were seen in Poland (+18.0%), Bulgaria (+16.0%) and Lithuania (+9.9%), where housing demand has remained strong despite general market uncertainties. This growth could be driven by a combination of factors, such as economic recovery, rising wages, and government incentives for homebuyers.
Quarterly Variations in the EU
In terms of quarterly variations, eight EU member countries reported a decrease in house prices, while eighteen countries recorded increases. The largest quarterly declines occurred in Denmark (-2.5%), France (-2.1%) and Slovakia (-1.7%), indicating a continued correction in these markets.
On the contrary, Bulgaria (+7.1%), Hungary (+5.1%) and Poland (+4.3%) presented the largest quarterly increases, maintaining their strong annual growth trends. These increases suggest that demand in these countries remains high, possibly due to factors such as strong labor markets, foreign investment and favorable mortgage conditions.
Developments in Specific Countries
- Germany: The German real estate market suffered a sharp decline, with prices falling 5.7% year-on-year. This decline continues the downward trend of 2023, when prices had already decreased by 10.2%. Rising mortgage rates and excess housing supply could be contributing to this decline.
- France: House prices in France also saw a significant drop, falling 4.8% year-on-year and 2.1% compared to the previous quarter. This could reflect economic uncertainty and a cooling of the real estate market after years of sustained growth.
- Poland: In stark contrast to Germany and France, the real estate market in Poland prospered, up 18.0% year-on-year and up 4.3% compared to the previous quarter. Strong demand and economic stability have driven this growth, positioning Poland as one of the most dynamic markets in the EU.
- Luxembourg: The country recorded the largest year-on-year drop in house prices, with a drop of 10.9%. This plunge follows a 14.5% drop in 2023, indicating a sustained cooling of the market after several years of rapid growth.
Outlook for the European Real Estate Market
Overall, the first quarter of 2024 presents a mixed picture for the real estate market in the EU, with important variations between countries. While some major economies, such as Germany and France, see significant declines, others such as Poland and Bulgaria show solid growth. Market dynamics in each country are influenced by a combination of local economic conditions, interest rates, and supply and demand factors in the housing sector.
Looking ahead, the market is expected to remain volatile, especially as the effects of inflation, rising interest rates and government housing policies continue to unfold across the region. Countries with stable economic growth and favorable home buying conditions, such as Poland and Bulgaria, could continue to show positive trends, while those facing economic challenges could see further declines.
