The probability of a fall in real estate prices in Europe is increasing due to the slowdown of the economy and the rapid growth of interest rates, according to a note published on Wednesday by the rating agency Moody’s. “The risk of a downturn in the real estate market in Europe and a large revaluation of land for residential development has increasedwrites Moody’s. Before continuing:If mortgages become more expensive, the demand for housing will fall, which is likely to lead to lower house prices after several years of growth“.
But this fall in prices will not allow more households to access property, their purchasing power reduced by inflation. “Housing demand will also suffer due to weak consumer confidence, with consumer risk aversion rising as the Russia-Ukraine conflict continues to add to economic uncertainty.predicts Moody’s.
Banks are in trouble
A sharp drop in prices, more than 15%, could put banks that have recently purchased mortgage-backed financial securities, particularly in France, Italy, Spain and the Netherlands, into trouble. Banks in northern Europe are most vulnerable to the impact of a market downturn, Moody’s notes, but they also have the most comfortable financial cushions. Falling prices will also have implications for social housing in the United Kingdom, which is funded by groups that derive most of their income from selling properties on the market.
Already in France, real estate experts are predicting a drop in prices, especially in the capital. In Paris, the Meilleurs agents are considering a price reduction of only 3% per year.
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