European house price confidence 'bullish'

European house price confidence 'bullish'
People across Europe are finding housing expensive

The latest data and analysis from ING has revealed that confidence in European house prices is rising. However, the temptation to over-stretch financially is putting consumer finances under pressure.

According to a new survey on the attitudes on the housing market covering 15,000 people in 15 countries, people across Europe are feeling more bullish. The majority of consumers (59%) believe that prices will rise over the next 12 months; confidence is up by three percentage points from last year – the first rise in two years.

House price expectations have leapt in Romania (72%), Spain (66%) and the Czech Republic (65%) as their economies continue to grow. Romania shows the largest leap (20 percentage points), although most people only expect house prices to rise slightly, but in Spain, where mortgages have reportedly become easier to secure, expectations are up by 14 percentage points.
 
On the other hand, expectations in the UK have plummeted. The proportion of people who believe house prices will rise over the next 12 months is down by 13 percentage points since 2016, from 57 per cent to 44 per cent. See Figure 1 for full international table.

Financial fragility

However, latest IMF data shows house prices are continuing to increase relative to incomes and rent in a number of countries1, making housing increasingly less affordable. ING’s study found a similar reaction with three in five (61%) people considering housing to be expensive.

With prices continuing to rise, the study reveals a number of consumers could be lured into a false sense of security and are overstretching their finances as a result.


Across Europe, two in five (41%) report that their current home was over or at the top of their budget, while nearly a quarter (23%) of all respondents in Europe find that their running costs are higher than they anticipated, and one in five (20%) find it difficult to manage their housing payments.
 
The impact could be leaving many people with limited disposable income, affecting the amount they are able to save and put towards other expenses.

This is supported by findings from the ING International Survey Savings 2017 released earlier this year, which found that 29 per cent of people in Europe have no savings at all. Of the 71 per cent who say they do have savings, more than a third (36%) have no more than three months’ take-home pay put aside, leaving them potentially vulnerable to unexpected costs or loss of income.

In the ING International Survey Homes and Mortgages 2017, when consumers were asked whether their country is on the right track in terms of housing, just 29 per cent of people in Europe agreed, while 45 per cent disagreed.

Nathalie Spencer,  ING behavioural scientist, had this to say: “People across Europe are finding housing expensive; many have paid at the top of or even above their budget for their home, and some have higher-than-expected running costs too. The result is many are feeling the pinch and finding it difficult to pay their rent or mortgage each month.

When housing is expensive people have less available for saving or investment, which may leave them vulnerable if faced with unexpected income or expenditure shocks. Planning and sticking to a budget is crucial when buying and renting a home and will help ease pressure on the purse strings in the long term.”

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Latest Comments

Tony Gimple
Tony Gimple 09 Dec 2017

Linking professionalism to limited company borrowing is a flawed concept. Despite S24 etc., limited companies are the most tax inefficient way of running a property business and leave borrowers seriously...

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Evelyn Attwood
Evelyn Attwood 01 Dec 2017

It's normal. If you plan to buy a house in one of the most beautiful spots in the country you should pay a high price.

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Evelyn Attwood
Evelyn Attwood 01 Dec 2017

I think that the situation will be the same at December.

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Scott Garnet
Scott Garnet 06 Nov 2017

If you have a patio or a porch it is important to make sure that any connecting doors are secured. Good advice for sliding glass doors is replacing the panels with storm resistant glass and getting heavier...

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richardrawlings
richardrawlings 01 Nov 2017

What has not been mentioned here is the effect of not only higher interest payments, but also that these payments are less likely to be offsettable as a business cost due to the scaling back of mortgage...

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Kelvin Lloyd
Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

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maggie swift
maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

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maggie swift
maggie swift 09 Oct 2017

I have recently read that the bungalows can provide social housing for elderly residents in London.

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zoe glover
zoe glover 05 Oct 2017

Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

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Paul Edwards
Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

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Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

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RyanGeo
RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

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