Eurozone Crisis Affecting The Real Estate Market
News Posted On: 24 September 2012
The Eurozone has been afflicted with a financial crisis for quite some time now. Economies of countries such as Portugal, Ireland, Spain and Greece continue their slump in real estate, as talks of a proposed bailout from their well-to-do partners are slowing down remarkably. The real estate market in Asia is also facing troubled times, save for countries such as Hong Kong and India, both of which have experienced year-on-year profits for Q2 of 2012.
Recovery of the United States housing market
The seasonally adjusted house price index for purchase only by the FHFA (Federal Housing Finance Agency) shows that prices in the States saw a year-on-year rise of 1.12 per cent last year. However, the same price index released by Case-Shiller/S&P dropped by 0.74 per cent, making it the lowest decline in annual terms since the third quarter of 2010.
Bad news for Europe
The second quarter of 2012 saw alarming year-on-year falls in prices in Greece, Ireland, Spain, the Netherlands and Portugal (each down by over 10 per cent after inflation). Cyprus and Poland also seem to be drawn into the crisis. In the countries that wee worst affected by the crisis saw significantly greater declines in real estate prices this year as compared to the second quarter of 2011. Fifteen of the twenty two EU countries recorded a drop in real estate prices.
The plight of major European countries
The weakest real estate market in the world was Ireland as the country’s residential property index fell by 16.85 per cent year-on-year in the second quarter of 2012, and plunged 2.91 per cent in the third quarter of 2012. Mortgage lending was weak in the country, and the volumes of transactions were low.
The following 8 weakest real estate markets on the planet were all in the European continent, including the Netherlands which saw a drop of 10.12 per cent during the year to the second quarter of 2012, Spain with a 13.18 per cent fall, Greece plunging 11.92 per cent, Poland by 8.19 per cent, Cyprus by 7.68 per cent, Portugal by 10.95 per cent, Sweden by 4.18 per cent and Slovakia with a 5.61 per cent drop. All the countries except Slovakia experienced bigger drops in house prices this year as compared to 2011.
The other countries in Europe that saw reasonable year-on-year falls in house prices to the second quarter of 2012 included the UK with a 3.42 per cent drop, Bulgaria with 3.87 per cent, Romania with 2.71 per cent, Lithuania with 3.07 per cent, Russia with 2.08 per cent, Finland with 2.22 per cent and Romania with 2.71 per cent.
The countries that enjoyed a rise in house prices included Germany whose real estate prices rose by 5.24 per cent – a fantastic improvement from its decline during the second quarter of 2012 of 0.65 per cent, Norway, whose prices were up to 6.26 per cent year-on-year, Switzerland with a 4.86 per cent rise, Estonia with 2.82 per cent, Latvia with 2.5 per cent, Iceland with 1.72 per cent and Turkey with 2.57 per cent.
Written by Les Calvert
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