Confidence in house price growth rises in Europe but many feel homes are too expensive

Confidence in European house prices is rising, but the temptation to over stretch financially is putting consumer finances under pressure, according to the latest research.

Overall 59% of people in Europe expect house prices to rise in the next 12 months but 61% believe that housing is too expensive and one in five say they struggle with the cost, the sixth annual ING International Survey Homes and Mortgages 2017 reveals.

It is the first time in two years that confidence in house prices has increased and this was led by a rise of 20% to 72% in Romania, while 66% in Spain are confident about future values, a rise of 14% and 65% in the Czech Republic.

On the other hand, expectations in the UK have plummeted. The proportion of people who believe house prices will rise over the next 12 months is down by 13% since 2016 from 57% to 44%.

However, with prices continuing to rise, the study reveals a number of consumers could be lured into a false sense of security and are overstretching their finances as a result. Some 41% report that their current home was over or at the top of their budget, while 23% of all respondents in Europe said that their running costs are higher than they anticipated, and 20% find it difficult to manage their housing payments.

The impact could be leaving many people with limited disposable income, affecting the amount they are able to save and put towards other expenses, the report says and this is supported by findings from the ING International Survey Savings 2017 released earlier this year which found that 29% of people in Europe have no savings at all.

In the current study when consumers were asked whether their country is on the right track in terms of housing, just 29% of people in Europe agreed while 45% disagreed.

‘People across Europe are finding housing expensive. Many have paid at the top of or even above their budget for their home, and some have higher than expected running costs too. The result is many are feeling the pinch and finding it difficult to pay their rent or mortgage each month,’ said ING behavioural scientist Nathalie Spencer.

‘When housing is expensive people have less available for saving or investment, which may leave them vulnerable if faced with unexpected income or expenditure shocks. Planning and sticking to a budget is crucial when buying and renting a home and will help ease pressure on the purse strings in the long term,’ she added.

Enter your e-mail address to receive updates straight to your inbox

I'm interested in..
Your mail preferences