Unaffordable House Prices in Europe
The fifth annual ING International Survey – Homes and Mortgages 2016, which surveyed almost 15,000 people in 15 countries about their attitudes on the housing market, found that just over half (56%) of people in Europe expect house prices to rise over the next 12 months. The number who think that house prices will rise remains unchanged since last year, indicating there could be a levelling of confidence.
The most dramatic shift has been in the UK, where expectations of rising house prices plummeted by 13 percentage points, prior to the EU referendum.
Following the Brexit vote, the question was repeated. Post referendum, the share in the UK who expect house prices to fall grew 16 percentage points – from six per cent to 22 per cent. Less than half (46%) of people in the UK now believe house prices will rise in the next year – the lowest proportion since the first survey was conducted in 2012.
Falling interest rates are one factor that can typically influence house prices. Across Europe, Luxembourg (28%) and the UK (26%) have the largest share of people who report that low interest rates have pushed up house prices where they live. However, in all but two of the countries included in the study, when asked how the fall in rates has affected house prices where they live, respondents most commonly (39%) say they ‘do not know’, indicating that few actually understand the effect on house prices.
Unaffordable housing is having an impact across Europe. Three fifths (60%) of people find that house prices where they live are expensive and a third (33%) are putting their lives on hold as a result. Those affected admit to putting the brakes on their futures, with nearly one in three (29%) being forced to live with others, almost a quarter (22%) saying they feel trapped in their current jobs and almost one in five (16%) delaying having children.
High house prices are resulting in one in four (24%) people finding it difficult to pay their mortgage each month, reaching highs for instance in Poland (41%) and Romania (40%).