Covid-19 will worsen housing affordability, report warns

Housing affordability across Europe will worsen for young and low-income groups after Covid-19, Moody’s has warned.

The rating agency says the pandemic will speed up “fundamental shifts” in the European housing market, with affordability declining despite falling house prices.

The lack of affordability will also lead to greater demand for social housing and rental market regulation, it says, and a shift in housing preferences away from urban areas to smaller cities and suburbs.

In a report on the European housing market, Moody’s said Covid-19 has triggered a severe economic downturn in Europe, with economic activity contracting “on an unprecedented scale and unemployment rising”.

While European house prices have remained relatively stable to date because of policy support, it expects “prices will fall in most European countries in the aftermath of the pandemic”.

It noted that “recessions have historically reduced housing demand because of lower disposable income, job losses and uncertain sentiment”.

The agency expects house prices to decline in 2021 before recovering again in 2022 on the back of a wider post-crisis economic rebound.

The extent of price declines will depend on supply and demand dynamics in specific markets.

Source link

Add a Comment