Europe’s House Prices Dip
In recent times expats have not been drawn to Europe by housing prices, which,.over the past decade, have surged in France, Spain, the Netherlands and Ireland. But now housing prices be leveling off in some areas as interest rates increase. Seven rate hikes by the European Central Bank since the end of 2005 and the likelihood of further increases are making an impact.
Housing prices in Ireland have ceased their meteoric rise in February for the first time in more than four years. French housing starts plunged 15.1% in the three months through February, the steepest drop since January 2001.
House-price inflation in Spain slowed below 10% in the fourth quarter of 2006 for the first time since 1999. The price of vacation homes is likely to drop by as much as 10% this year, according to RR de Acuna & Associates in Madrid, which values real estate for about 40% of mortgages. Housing construction has been a major cause of Spain’s economic growth. Spain has traditionally been a favorite among Northern Europeans seeking second homes, but overbuilding in coastal areas has made it less attractive recently.
The inflation in U.K. housing prices may also be slowing, according to S&P. The Bank of England has raised its main interest rate to 5.25%, the third increase since August.