MNI BRIEF: EA Housing Market Holds Up In Face Of Covid Crisis

Europe's housing market has proved resilient in the face of successive waves of Covid-19 and related containment measures, according to the latest ECB Economic Bulletin, thanks to a combination of continued demand, monetary and fiscal support. Prices exceeded their pre-crisis levels in the fourth quarter of 2019 by 4.3% and 2.6% in the third quarter of 2020, and by around 6% in both the fourth quarter of 2020 and the first quarter of 2021, a pace not seen since mid-2007.

The outlook for the housing market remains closely tied to pandemic-related uncertainties, the authors note, with the possible spread of new variants possibly weighing in demand in particular. The withdrawal of policy support before the recovery is on track may also limit prospects for the housing market, while an overall rise in risk-free interest rates could exert upward pressure on mortgage rates.