European February 2009 Housingreview
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EUROPEAN FEBRUARY 2009 HOUSINGREVIEW Research rics.org EUROPEAN HOUSING REVIEW INTRODUCTION The RICS European Housing Review 2009 is commissioned and published by RICS (Royal Institution of Chartered Surveyors) which is the largest organisation for professionals in property, land, construction and related environmental issues worldwide. With 100 000 members, RICS is the leading source of property related knowledge, best practice and consumer protection. Policy makers, from local authorities to governments and global bodies, listen to and value RICS’ impartial advice on public affairs, economic analysis and policy research. From its Brussels office, RICS monitors, comments on and influences policy through its relationships with the European Union institutions. RICS also provides a comprehensive news, information and analysis service, including: • RICS Global Commercial Property Survey - a quarterly analysis of the world’s commercial real estate markets • Market surveys – independent market research on UK property, land and construction • Global Real Estate Weekly - a brief overview of key economic and property market indicators To subscribe to these publications, or to find out more about RICS, email [email protected] or call +44 (0)870 333 1600 RICS Europe RICS Europe, based in Brussels, is the regional head office of RICS in continental Europe and represents the 17 European National Associations (RICS Belux, RICSČeska Republika, RICS Cyprus, RICS Danmark, RICS Deutschland, RICS España, RICS France, RICS Hellas, RICS Italia, RICS Magyarország, RICS Malta, RICS Nederland, RICS Oesterreich, RICS Polska, RICS Portugal, RICS Rossia, RICS Switzerland). To find out more about membership in continental Europe, contact RICS Europe in Brussels on +32 2 733 1019 or email [email protected]. Copyright in all or part of this publication rests with RICS and save by prior consent of RICS no part or parts shall be produced by any means electronic, mechanical, photocopying or otherwise, now known or to be devised. 2 EUROPEAN HOUSING REVIEW ABOUT THE AUTHOR This report was written and researched by Michael Ball. Michael is the Director of Urban and Property Economics Consultancy Ltd, London and Professor of Urban and Property Economics in the School of Real Estate and Planning, University of Reading, UK. He has written widely on housing and commercial property economics, and undertaken research on real estate markets around the world. He jointly chairs the housing economics group of the European Network for Housing Research and leads the expert advisory panel on housing markets and planning for the UK government’s Communities and Local Government department. Michael can be contacted on [email protected]. While every effort has been made to ensure that the data and other information in this report are accurate, some errors may remain. In addition, it should be remembered that information in this field is variable in content and quality. The purpose of the Review is to provide information, analysis and background to Europe’s housing markets and housing provision systems. It is not intended for use directly either in market forecasting or for investment decision purposes. The full report is available at www.rics.org/ehr. 3 EUROPEAN HOUSING REVIEW CONTENTS Page 05 Preface 06 Chapter 1 Housing Market Developments in Europe 09 Chapter 2 Short-Run Dynamics in European Housing Markets 16 Chapter 3 European private rent controls – social goal or own goal? 22 Chapter 4 Recent Market Performance: Country Summaries 29 Country Reports 29 Chapter 5 Cyprus 34 Chapter 6 France 44 Chapter 7 Germany 56 Chapter 8 Hungary 65 Chapter 9 Ireland 74 Chapter 10 Italy 81 Chapter 11 The Netherlands 91 Chapter 12 Poland 102 Chapter 13 Spain 112 Chapter 14 Sweden 121 Chapter 15 UK 4 EUROPEAN HOUSING REVIEW PREFACE Preface Emphasis is put on residential markets at the national Interest in EU housing markets has expanded level. Where of particular significance regional issues are considerably in recent years. This report provides considered, but it is beyond the scope of this study to information on housing in individual countries and undertake detailed regional and city analyses. comparative housing market analysis across the Housing markets are continually changing and there is European Union. a danger that information becomes out of date quickly. This Review aims to This report was completed in the last weeks of 2008 and, so, obviously cannot comment on or describe any • Offer coverage of EU housing and mortgage events occurring later than that. Headline price data were finance systems updated in the second week of February 2009. • Examine housing markets in a comparative While effort has been made to ensure that the data and pan-European way other information in this report are accurate, some errors • Give informed interpretations of data and events may remain. In addition, it should be remembered that information in this field is variable in content and quality. • Create quick reference information on housing The purpose of the Review is to provide information, and related topics, such as the economy analysis and background to Europe’s housing markets and housing provision systems. It is not intended for use • Provide an understanding of the current state of directly either in market forecasting or for investment EU housing markets decision purposes. • Enable evaluation of the growth of homeownership Secondary sources were predominantly used but many in the EU estimates and manipulations of data were undertaken by • Consider the role played by rental housing the author. For simplicity, however, only the sources of independent data used are cited in the Figures and Tables. • Comment on housing markets in the context of macroeconomic and demographic influences This is the eleventh year since the first Review was published. The author should like to express his • Outline important policy change gratitude for continued support of the Royal Institution The format adopted is to provide a number of introductory of Chartered Surveyors over the years and, in particular, comparative chapters, presenting an overview of recent for the helpfulness of RICS Head of Research, Stephen developments and raising topical issues. They are followed Brown and RICS Chief Economist, Simon Rubinsohn. by specific country reports on a chapter by chapter basis. These reports explain, where possible, the broad structure of a country’s housing system, examine macroeconomic, financial, policy and other influences on housing demand and supply and evaluate current market conditions. Given the expansion of the EU in 2007 to 27 member states, it is not feasible to provide individual chapters on all countries. Instead, after the initial pan-European analysis, 11 countries are examined in detail. The policy is to include all of the four largest economies, plus a variety of others from around the EU. 5 EUROPEAN HOUSING REVIEW CHAPTER 1: HOUSING MARKET DEVELOPMENTS IN EUROPE Markets stagnate and decline Gloom spread to all of Europe’s housing markets in 2008. The decline in housing markets is being further By year end prices were either stagnant or down. In fact, in influenced by the scale of the economic recession in real terms, prices were falling everywhere by the end of the Europe. The IMF forecast in January 2009 that the euro year, given that inflation had been quite high in several areas’ economy would decline by 2% and the UK’s by countries and averaged 1.6% for the EU as a whole by 2.8% during 2009, though hopefully with a levelling off the end of 2008. in 2010. Such gloom may well be amplified in housing markets, which look set for a prolonged downswing at There were some substantial turnarounds from market least as great as that of the early 1990s. experience in 2007. Scandinavia, central and eastern Europe and some parts of the Mediterranean, such as The recovery may also be a slow one because of the Cyprus, were still experiencing prices surges in 2007 core importance of long-term finance for healthy housing but no longer in 2008, with the sharpest reversals in the market activity. The financial system has been battered Baltic States. because of mortgage finance, and the riskiness of holding mortgage debt for investors and lenders rises Not even the countries that previously did not experience as house prices fall. Such feedback effects between house price booms are immune from the housing market housing markets and financial systems suggest that squeeze. Most notably, prices in Austria and Germany restoring confidence in housing finance systems is are drifting down. The reason, of course, is that they are going to take a long time. being buffeted by the same events as the markets in other countries. Geography seems to matter. The Nordic countries apart from Sweden, Spain, Ireland and the UK, and recent EU Figure 1: House prices in Europe member states from central and eastern Europe seem to have had a particularly tough time in 2008. For most Note: Blank equals zero 2007 2008 40 other countries, prices seem flat or falling slightly in real terms. This seems to offer the hope that they will miss 30 out on severe downswings. It is hard to say but the signs 20 in the closing months of the year were that progressively 10 more European housing markets were seeing a slump in % buyer interest and severely limited ability to raise finance 0 for purchase. -10 -20 The twin shocks of first commodity price booms that -30 Greece Netherlands Italy Switzerland Cyprus Sweden Germany Iceland Spain Finland Denmark Poland Norway Ireland France UK Estonia pushed up interest rates and dented economic growth, Austria followed by a credit crunch of unprecedented scale in modern times has affected the whole of Europe and its housing markets. The prospects for 2009 are of a Note: Blank equals zero further weakening of housing markets, price falls may accelerate in quite a few countries and become more House price data are of variable quality, coverage and timeliness.