Real estate markets

Irish housing market: Prices rising rapidly in the run up to Brexit

After house prices rose sharply, the Irish real estate market suffered a spectacular crash in the wake of the international financial crisis: in comparison with many other real estate bubbles, prices in Ireland fell both more quickly and more severely. Within five years, they had plummeted by more than 50%. Following the price correction, houses and apartments cost on average only 45% of their peak levels of 2007 on a nationwide basis; in some market segments prices were as low as 10 percentage points below this level. However, the market recovery was also different from other national real estate markets with burst bubbles. Instead of a gradual stabilisation, the collapsed market experienced rapidly rising prices again. In 2015, the powerful upward trend tailed off. Stricter lending conditions played a significant role in nearly halving growth to a current level of 8% per year.   Yet, how could this swift about-turn…

France: Real estate market gains a boost with interest rates at low levels

The boom on many real estate markets that started at the end of the 1990s has sent valuation levels in France spiralling upwards. Within ten years, purchase prices for houses and apartments surged by some 150 percent. The outbreak of the global financial market crisis represented a setback for the market, but did not unleash a major correction as was the case in Spain or Ireland. As interest rates started falling, the market quickly registered positive levels again. Prices reached their highest levels to date at the end of 2011. After this, prices started crumbling despite the further decline in interest rates. Demand eroded in response to the deceleration in the aggregate growth rate to way below one percent p.a. and the consequent rise in the unemployment rate into the double-digit region. From 2012 to 2015, prices fell moderately by 8 percent in total. They have now started climbing again,…

German property market: are there signs of a turnaround in commercial property?

 German commercial property has been extremely attractive to investors for some time. It offers a significant yield advantage compared with bonds, while the risks are viewed as manageable in view of the sound economic situation in Germany. At the same time, interest is concentrated on the comparatively small segment of high quality, attractively situated office and retail properties in the seven largest German cities, the top locations. Naturally, there are not too many of them, meaning that the supply for potential tenants and purchasers is limited. The situation is exacerbated for the latter by the fact that owners are reluctant to sell. Although they can achieve substantial prices, they are then confronted with a lack of opportunities to invest the proceeds. Ultimately, the lack of supply meant that investment volume fell by 5% compared with the previous year in 2016 to EUR 53 billion – a figure which was only…

Italian property market: Housing market still in the grips of the economic doldrums

Government crisis, debt crisis, economic crisis or banking crisis – Italy is certain to regularly be in the public limelight. By contrast, it would seem as if there is far less coverage of the property market between North Italy and Sicily than there is of the housing markets in other European countries. That said, the market is not really suited as the basis for snappy headlines. The past saw few excessive price hikes just as there were few sharp price corrections. However, the minor press coverage should not delude one into thinking that the property market is not just as important for macroeconomic developments or the financial system as it is in other nations. Meaning there can be no harm in casting a glance at the state of the Italian market for residential properties. About 20 years ago, with the introduction of the single European currency already on the horizon,…

Lending growth in the Eurozone remains weak

Last year, banks‘ loans to companies, private households and governments grew in the Eurozone by 0.9 percent to EUR 10,774bn. Private loans for house purchases, which rose by 2.4 percent, accounted once again for the highest growth contribution. In the segment of loans to corporate clients, the long years of contracting loan volumes came to a halt, with corporate loans climbing in 2016 by 0.6 percent. In contrast, the volume of loans to regional and local authorities has further declined. All in all, the renewed growth in customer loans that was already evident in 2015 has stabilised, but there are still no visible signs of accelerating momentum on the European credit market.  Furthermore, great differences could be noted in developments between individual national markets: the Europe-wide growth was driven almost entirely by banks in France and Germany which recorded above-average gains in their respective loan volumes. In contrast, banks‘ lendings…

Growth in credit markets in Germany expected to accelerate

Last year, the surge in growth in Germany’s credit markets seen from the end of 2015 onwards stabilised and intensified. Corporate and private households’ bank debts rose 2.7 percent to EUR 2,372.3 billion. In other words, the usually sluggish trend of past years was at long last overcome. Private property financing was again the growth driver. With stronger new building activity and increasing demand, as well as rising prices in the property markets, the need for credit grew appreciably. Demand was also buttressed by extremely favourable financing terms. The only thing preventing even more buoyant growth was the translation of the EU Mortgage Credit Directive into German law, which led to stricter regulations for loan approvals above all for senior citizens and young families. The trend for corporate credit was also gratifying: From 2013 to 2015 this market segment saw only weak, indeed usually negative change rates. However, in 2016…

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