Homes and mortgages 2015: Optimism up on house prices
This ING International Survey on Homes and Mortgages asked almost 15,000 people in 15 countries about their views on housing. It shows that overall in Europe house price optimism on the rise – but high costs are causing strain. It explores whether conditions are worsening for first time buyers and if a fall in house prices would be good for society.
Executive summary
Spain is top of the ING International Survey house price optimism index 2015. The index is the year-on-year change in expectations house prices will rise in the next 12 months. This survey of almost 15,000 people in 15 countries shows that overall in Europe house price optimism is up slightly, with the share of European consumers who think prices will rise in the next 12 months increasing from 53% in 2014 to 56% in 2015. Looking just at 2015, rather than the year-on-year change, house price optimism is highest in Turkey, Luxembourg, the Netherlands and the United Kingdom. It is lowest in Italy, France, Poland and Spain, where fewer than half expect prices to rise in the next 12 months.
When most people expect house prices to rise in the next 12 months, it appears that prices tend to go up. The finding comes to light when results from the Homes and Mortgages surveys in 2012 and 2013 are compared with house price changes the following year. This correlation does not imply causation.
Affordability “difficult”
Affording a home is difficult for 26% of owners with a mortgage and 24% of renters. Of owners with a mortgage in a foreign currency, an even higher share are feeling the strain. The ability to pay is not the only factor behind the opinion that house prices are too high. Most people who say paying housing costs is easy also say houses where they live are expensive.
Opinions are mixed on the effects of very low interest rates since the global financial crisis on house prices. But renters are more likely to think that low rates are pushing house prices up.
Locked out?
First time buyers struggle Almost four-in-five people in Europe agree conditions are worsening for first time buyers. The share of people who hold the view is the same across most age groups – 25-year-olds are as likely as over-50s to agree. Despite (or perhaps because of) the financial challenges for first time buyers, younger people are most likely to see owning a house purely as an investment.
“The view that first time buyers face worsening conditions is held almost universally. The question is: what can be done for them?”
Against this backdrop, 72% of European consumers agree it would be good for society if house prices fell. Among owners, more than two-in-three agree.
Money top of mind if buying
When deciding whether to buy a home, household income is the most important factor in almost all countries surveyed, ahead of economic outlook, house prices or stage of life. Likewise, when deciding on the specific property, price is top, ahead of house size or having a garden or short commute.
Housing decisions are not only about renting, buying or selling. Renovations are also part of the equation. When asked their home improvement of choice, solar panels emerge as a more sought-after renovation for people in Europe than a new bathroom. A new kitchen tops the list overall. Just under half – or 43% – of people in Europe indicate they are planning to renovate or decorate their property in the next 12 months. Of those, most are planning to spend less than €2,500 and 70% intend to fully fund it with money they have saved.
Looking at the moment when pre-retirees might choose to downsize, it appears few actually intend to sell their home to pay for retirement. Overall, 70% of owners in Europe do not consider their home as part of their pension.
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