Finance
Rapid euro zone house market recovery raises affordability concerns, ECB says
Published by Global Banking & Finance Review®
Posted on March 17, 2025
2 min readLast updated: January 24, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on March 17, 2025
2 min readLast updated: January 24, 2026
The euro zone housing market has recovered, with prices likely to rise, challenging affordability, according to the ECB.
FRANKFURT (Reuters) - The euro zone housing market has already recovered from its recent slump and prices are likely to rise further, challenging affordability in a potentially unhealthy development, the European Central Bank said in an Economic Bulletin article.
House prices slumped from 2022 as surging inflation, high energy costs and rising interest rates all constrained a market that had been on an exceptional run in the preceding several years.
But this downturn was shallow, with the peak-to-trough part of the cycle showing a cumulative decline of 3% over one and a half years, a smaller drop than during the global financial crisis and the sovereign debt crisis, when prices fell almost 5%, the ECB said on Monday.
"The level of house prices have remained high," the ECB said. "This has negatively affected the affordability of housing despite a meanwhile less tight monetary policy."
"In view of the combination of supply limitations and continued sound demand fundamentals, house price developments may well continue on their upward path, even though this may not be an entirely healthy outlook for the economy as a whole," the ECB added.
The downturn was also more concentrated than in the past.
Only 12 of the 20 euro zone countries saw declines and unlike in past downturns that were driven by nations on the bloc's periphery, this time Germany was the key driver, the ECB said.
(Reporting by Hugh Lawson)
The article discusses the recovery of the euro zone housing market and its impact on affordability, as reported by the ECB.
House prices are rising due to supply limitations and continued demand, despite previous economic challenges.
Germany was identified as a key driver in the recent housing market downturn.
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