ECB: rapid housing market recovery in euro zone raises concerns around affordability

According to the European Central Bank (ECB), the housing market in the region has recovered from the recent downturn, and the prices are likely to continue rising. Such dynamics may negatively affect housing affordability, despite the softer monetary policy.

Prices will continue rising due to limited supply and stable demand on the housing market. Such a forecast may be unhealthy for the region's economy as a whole, the bank emphasizes.

According to the regulator, the price of housing in Europe fell sharply in 2022. Back then, accelerating inflation, expensive energy and high interest rates held the market back. Nevertheless, according to the ECB, the recent drop in housing prices was shallow and totaled 3% over a year and a half.

12 of the 20 eurozone countries experienced the downturn. Unlike past declines, which were driven by the countries on the periphery of the bloc, this time the German housing market was the key driver, the ECB reported.