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Europeans expect rising house prices over the next 12 months

Three in five (59%) consumers across Europe believe that prices will rise over the next 12 months, according to the ING International Homes and Mortgages 2017 survey.

Confidence in European house prices is rising, but consumers’ finances are under pressure due to the urge to overstretch.

The sixth annual study, which surveyed almost 15,000 people across 15 countries about their attitudes towards the housing market, found that people in Europe are feeling more confident.

Expectations of house prices have leapt in Romania (72%), Spain (66%) and the Czech Republic (65%) as their economies continue to flourish. Romania shows the largest surge (20 percentage points), although most people only expect a slight rise in house prices. In Spain, where it is reportedly easier to secure a mortgage, expectations are up by 14 percentage points.

However, expectations in the UK have plummeted. The proportion of people who believe house prices will rise over the next 12 months is down by 13 percentage points since 2016, from 57% to 44%.

Despite this, the latest data from the International Monetary Fund (IMF) shows house prices are on the rise relative to incomes and rent in a number of countries, making housing increasingly unaffordable. ING’s study found a similar reaction with three in five (61%) people considering housing to be expensive.

Nathalie Spencer, ING behavioural scientist, commented: “People across Europe have higher-than-expected running costs. The result is many are feeling the pinch and finding it difficult to pay their rent or mortgage each month.”

With prices increasing, the study revealed a number of consumers could potentially overstretch their finances as a result of being lured into a false sense of security.

Across Europe, two in five (41%) of those who set a budget for their total costs reported that their current home was over or at the top of their budget, while 23% of all respondents in Europe find that their running costs are higher than they anticipated, and 20% find it difficult to manage their housing payments.

These results show that the impact is capable of leaving many people with limited disposable income, essentially affecting the amount they are able to save and put towards other expenses.

“When housing is expensive people have less available for saving or investment, which may leave them vulnerable if faced with unexpected income or expenditure shocks,” Spencer added. “Planning and sticking to a budget is crucial when buying and renting a home and will help ease pressure on the purse strings in the long term.”

Country

2014

2015

2016

2017

Change (2017-16)

Romania

46%

53%

52%

72%

+20

Spain

35%

49%

52%

66%

+14

Czech Republic

47%

50%

52%

65%

+13

Poland

44%

43%

43%

51%

+8

France

42%

41%

46%

54%

+8

Luxembourg

72%

76%

78%

86%

+8

Austria

71%

69%

71%

78%

+7

Germany

60%

61%

61%

64%

+3

Netherlands

57%

70%

69%

72%

+3

Italy

30%

33%

37%

38%

+1

Turkey

72%

82%

81%

77%

-4

Belgium

60%

55%

65%

59%

-6

United Kingdom

72%

70%

57%

44%

-13

European Consumer

53%

56%

56%

59%

+3

Australia

n/a

63%

50%

56%

+6

United States

56%

60%

57%

59%

+2

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