European housing market continues recovery with persistent country differences
According to new Eurostat figures, the overall EU housing market continued to recover in the last quarter of 2024, following the earlier cooling that had taken place between mid-2022 and late 2023. That said, differences between member states remain wide. There were even some more countries with price declines again in the fourth quarter. Especially in France and Finland, the housing market remains in weaker shape. The good news is that prices continued to rise in Luxembourg and Germany - the two countries with the biggest correction during the cooling period. Also, quite a few countries, including Bulgaria and Portugal, continued to record strong price increases. The Belgian housing market roughly mirrored that of the EU as a whole in the fourth quarter, but also for the whole of 2024. Although house prices in Belgium rose at almost the same rate (3.2%) as those in the EU (3.3%) in 2024, due to relatively high headline inflation, real house price growth nevertheless lagged behind (even falling by 1.1%) compared to that in the EU (0.7%).
Eurostat last week published house price figures for the fourth quarter of 2024. This is the harmonised price index for EU member states, which takes into account both existing and new dwellings and corrects for price changes due to changes in the characteristics of the property sold. In the EU as a whole, house prices rose 0.7% in Q4 2024 compared to the previous quarter. This is a slowdown compared to the rate of increase in Q2 (2.0%) and Q3 (1.5%). Compared to the same quarter a year earlier, house prices in the EU were 4.9% higher in Q4, which is an acceleration in the annual rate of increase compared to Q2 (+3.0%) and Q3 (+3.9%).
Persistent differences between countries
The positive Q4 figure shows that the European housing market continues to recover after the earlier cooling that took place between mid-2022 and late 2023. Nevertheless, there were some more countries with price declines compared to the previous quarter. By Q3 2024, that number had dropped to just two, coming from a peak of 16 countries in Q4 2022, but in Q4 2024, there were six again (see figure 1). They are Latvia, Sweden, Austria, Estonia, Cyprus and France. The French Q4 figure (-1.0%) is particularly striking. Indeed, after a cumulative price correction of 6.5% between the end of 2022 and spring 2024, the Q3 figure (+1.6%) had pointed to a recovery of the French housing market. In Finland, too, the housing market is still flirting with a correction. After falling further in Q3, prices there stabilised in Q4. They corrected by 11% since their peak in Q2 2022. All this indicates that despite the general EU recovery, the housing market continues to struggle to climb out of the trough in some countries.
On the positive side, other countries that experienced a solid price correction saw their prices rise further in Q4. These are mainly Luxembourg (+1.1%) and Germany (+0.3%). There are also still quite a few countries with sustained solid price increases in Q4. On the one hand, these are countries that also experienced a correction earlier but have now seen their prices rise strongly again for several quarters in a row. These include Slovakia (+3.6% in Q4), the Czech Republic (+2.4%) and the Netherlands (+2.1%). On the other hand, these are countries that have not experienced a correction and also saw their house prices continue to rise at a decent pace in Q4. These include Slovenia (+3.1%), Portugal (+3.1%) and Bulgaria (+2.7%) (see figure 1).
Viewed over the whole year, house prices in the EU rose 3.3% in 2024 from a year earlier, compared with a 0.3% fall in 2023. Of the five countries with a price decrease, three had a correction of more than 3%: Luxembourg (-5.2%), France (-3.7%) and Finland (-3.5%). There were 14 countries where prices increased by more than 5% in 2024, with four countries by even more than 10%: Bulgaria (16.5%), Poland (15.0%), Hungary (12.8%) and Croatia (10.4%).
For the EU as a whole, it is notable that prices of new dwellings have increased much more than those for existing ones in recent years. While prices for existing dwellings fell by 1.6% in 2023, those for new dwellings continued to rise by 3.3% that year. In 2024, new and existing house prices rose by 6.6% and 2.5% respectively. In Latvia and Italy, the difference in price increase between new and existing dwellings in 2024 was more than 5 percentage points. In Sweden and the Netherlands, the reverse occurred and the price change of existing dwellings was more than 5 percentage points higher than that of new ones (see figure 2).
Belgian versus EU housing market
The Belgian housing market roughly mirrored that of the EU as a whole in Q4 2024, and also for the total year 2024. The quarterly rate of increase weakened in Q4 (from 1.6% to 0.8%), as in the EU (from 1.5% to 0.7%). For the full year 2024, at 3.2%, price growth in Belgium was slightly below the EU figure (3.3%). Also in Belgium, prices of new dwellings (5.9%) rose much more than those of existing ones (2.6%) in 2024, with figures very similar to those for the EU as a whole.
However, an important difference between Belgium and the EU as a whole is obtained when we correct the house price increase in 2024 for general inflation. Relatively high headline inflation (4.3%) caused real house prices in Belgium to fall by 1.1% last year (see figure 3). In the EU, headline inflation was significantly lower at 2.6% in 2024, resulting in a 0.7% increase in real house prices there.
