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What the ECB Says About the State of the Real Estate Sector

28 December 2017

The latest bulletin from the European Central Bank states: “The recovery in housing markets is expected to continue to drive growth. Investment in housing increased by 1.3% in the second quarter of 2017, mirroring the continuation of the recovery in the euro area as a whole and many euro area countries.”

“From the start of the euro area crisis, investment in housing and household indebtedness have moved in opposite directions,” the study said. To explain, “In 2008, household indebtedness began to increase, while housing investment began to decline. Since 2013, this trend has reversed as the recovery in investment has been accompanied by a deleveraging by families. This development contrasts sharply with that of the period preceding the crisis when both debt and investment were rising.”

According to the ECB’s analysis, “Investment in housing and housing prices continues to be driven by very favourable financing conditions, portfolio readjustments in favour of housing investments against low return rates on long-term investment alternatives, and by increasing income growth related to job creation.”

According to the central bank’s economic analysis, “Recent indicators suggest that the positive dynamics of investment in housing will persist. Corporate confidence in the building segment improved further in October and remains at levels previously observed in 2008. Construction output also increased in the third quarter, in line with the positive growth in housing investment in the same quarter, although at a slower pace than at the beginning of the year.”

Story: Diário Imobiliário

Original Translation: Richard Turner