Eurozone House Prices Jumped in Second Quarter
October 08 2015 - 6:00AM
Dow Jones News
Eurozone house prices jumped in the three months to June, a sign
that the modest economic recovery may finally be boosting household
wealth.
As in other parts of the world, house prices tumbled in the wake
of the financial crisis. But after a brief rebound they resumed
their decline as the eurozone entered its own sovereign debt
crisis, and only began to rise again in the middle of last
year.
Even then, the rise was modest, leaving house prices still well
below their pre-crisis highs, particularly in countries such as
Ireland and Spain where the collapse of property bubbles was most
severe.
However, an enduring if unspectacular economic recovery, which
has produced a slow decline in unemployment rates, appears to have
finally propelled prices significantly higher in the second
quarter.
The European Union's statistics agency on Thursday said house
prices across the currency area were 1.2% higher in the three
months to June than they were in the three months to March, the
sharpest increase since the second quarter of 2010. Compared with
the second quarter of 2014, prices were up 1.1%, the largest rise
since the second quarter of 2011.
The second-quarter rise was led by those countries that saw
prices fall most sharply in the wake of the financial crisis.
Cypriot prices surged 7.4% on the quarter, while Spanish prices
rose by 4.1% and Portuguese prices by 3.7%. All three countries
received bailouts from the eurozone and the International Monetary
Fund, partly to help their banks deal with the consequences of
weakening property markets.
Outside those economies that are recovering from deep crises,
the rise in house prices were more modest. France recorded an
increase of just 0.1% on the quarter, while the Netherlands an
increase of 0.3%. Italian house prices continued their decline,
while Eurostat didn't release figures for Germany.
The jump in prices may feed concerns that the European Central
Bank's efforts to stimulate economic growth and boost the inflation
rate threatens a fresh bubble in asset prices.
The ECB in March launched a program of quantitative easing that
will see it buy more than one trillion euros of mostly government
bonds by the end of September 2016. QE programs work partly by
pushing up the prices of assets.
However, the rise in prices may also be good news for the
currency area. Rising house prices can underpin consumer
confidence, making homeowners feel wealthier and more willing to
spend.
Write to Paul Hannon at paul.hannon@wsj.com
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(END) Dow Jones Newswires
October 08, 2015 05:45 ET (09:45 GMT)
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