Housing in the euro area

Housing in the euro area — Twelve markets, one money
Jenny Osborne

This paper examines developments in the euro area housing market, with particular reference to the last ten years. Since the mid 1990s, the rising trend in euro area house prices has been remarkable both in its duration and strength, persisting during a phase of economic slowdown. However, developments have been far from uniform across the euro area, and there have been considerable differences in the experience of individual countries. This paper endeavours to explain why we observe such a diversity of house prices, in an area with a common currency and common interest rate. While the significant fall in interest rates over the past number of years has been an important determinant of the rise in house prices in many countries, differences in the structure of housing and mortgage markets have also played a big role. As a consequence, housing markets remain strongly national in character.