EU House Prices Post Biggest Annual Increase Since 2007

House prices in the European Union rose by 6.1% in the first quarter of this year from the same period of 2020, their biggest gain since 2007, the bloc’s statistics office said on Thursday.

The House Price Index for countries in the euro area rose by 5.8% in the first three months from a year earlier, its largest increase since the fourth quarter of 2006, Eurostat said in a statement.

Compared with the fourth quarter of 2020, house prices rose by 1.3% in the euro area and 1.7% in the EU in the first quarter of 2021.

Among EU member states for which data were available, the highest annual increases in house prices in the first quarter of 2021 were recorded in Luxembourg (+17.0%), Denmark (+15.3%), Lithuania (+12.0%), the Czech Republic (+11.9%) and the Netherlands (+11.3%), while prices fell only in Cyprus (-5.8%).

The house price issue has also become a lightning rod for criticism of the ECB’s ultra-loose monetary policy. Its president Christine Lagarde was questioned about it in the European Parliament at the end of June.

“Young people and middle-class families are forced to participate in a rat race, overpaying in an overheated housing market,” said Michiel Hoogeveen, a Eurosceptic Dutch MEP. “This is one of the consequences of your generous money creation and low-interest policies to keep weaker eurozone countries afloat.”

In response, Lagarde said there were “no strong signs of [a] credit-fuelled housing bubble in the euro area as a whole” but she added that there were “residential real estate vulnerabilities” in some countries and some cities in particular.