Fitch Ratings forecasts a deceleration in home price growth in Europe in 2022 compared to 2021, as pressures on affordability begin to restrict demand and trigger potential policy interventions.
In a statement Fitch says it expects house price growth to slow in six of the seven European countries included in the latest Global Housing and Mortgages Outlook and expects price growth to be generally stable in Spain.
According to Fitch, the reasons continue to be the shortage of on-demand property, accentuated by the change in housing preferences during the pandemic, and the low interest rates on mortgage loans.
The Netherlands and Germany will experience double-digit growth in 2021 and this strong growth will start to limit the number of potential buyers, but supply constraints mean that price increases in 2022 will continue to be high by historical standards and will exceed income growth in both countries, reports the rating agency.
UK with sharpest slowdown
For the UK, Fitch forecasts a sharper slowdown in house price growth to between 1% and 3%, after reaching 9% in 2021.
Transaction volumes have fallen after the stamp duty exemption ended and could fall further as mortgage rates gradually rise.
In Denmark, Fitch expects house price growth to slow as the strong demand for properties favoured by people moving during the pandemic wanes.
"We hope that policy makers and regulators, who are generally targeting investors rather than homeowners, will become more active in concerns about overvalued markets and high household indebtedness," says Fitch.