ECB: “High demand for housing will continue in the coming months”

ECB: “High demand for housing will continue in the coming months”

In its latest economic report, the European Central Bank (ECB) has dedicated a special section to the housing market.

The supreme monetary authority of the eurozone, based on its research on consumer expectations (CES), confirmed that in the coming months, demand for housing would remain at a reasonably high level.

According to the ECB, an average of 4.5% of citizens in the six main economic zones of the single currency (including Spain) announced plans to buy a house in the next 12 months in the third quarter of 2021, which is slightly higher than the results obtained in the spring and is in line with the indicators of early 2021.

Intention to buy is much higher among the high-income population (about 6.5%), while the result is more modest in the case of low-income families (less than 4%).

In this regard, the body, chaired by Christine Lagarde and Luis de Guindos, recalls that “the decision of families to buy a house depends on many factors, including their employment and financial situation, their income and savings, as well as their expectations regarding the general level of prices, prices for housing and mortgage lending conditions”.

“The demand for housing largely determines the intention to buy a house. In addition to the level of financial health, the expected dynamics of income also has a significant impact on decisions about investment in housing: respondents who intend to buy a house in the next 12 months, as a rule, have significantly higher expectations of income growth than those who do not plan to do so.”

According to the ECB’s findings from the survey, the savings accumulated by citizens during the pandemic will continue to stimulate demand for housing in the future.

About 44% said that an essential reason for accumulating savings since January 2020 was the desire to create a sufficient financial cushion for making a significant purchase in the future (a car, etc.).

Other reasons can be used to predict the persistence of demand for housing. These include:

  • growing attractiveness from an investment point of view;
  • expectations of more favourable terms for lending;
  • dynamics demonstrated by the real estate market.

The ECB stresses that the rise in house prices and the one expected in the forecasts “was much higher than the expected growth in rents and the general price index.” The central bank warns that such a scenario could lead to affordability problems for low-income families.

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