House prices, as measured by the House Price Index, rose by 4.5% in the EU-28 member states and by 4.0% in the 19 member states of the euro area in the first quarter of 2017 compared with the same quarter the previous year.These figures come from Eurostat, the statistical office of the European Union.
The House Price Index (HPI) measures the price changes of all residential properties purchased by households (flats, detached houses, terraced houses, etc.), both newly built and existing, independently of their final use and independently of their previous owners.
The highest annual increase was recorded in the Czech Republic (+12.8%). Lukáš Kovanda, chief-economist at the investment company Cyrrus told the Czech News Agency that the reasons for the rise were excessively slow building planning processes in the Czech Republic, as well as increased demand caused by low interest rates stemming from the central bank’s now discontinued weak crown policy.
In Prague, the price of apartments has already surpassed the rates seen in 2008, prior to the financial crisis, according to a study by the Association for Real Estate Market Development quoted by the news website iHned.cz However, it is a different story outside the capital, with prices remaining at 2 percent to 10 percent beneath their 2008 levels, according to the Czech National Bank (CNB)
CNB board member Vojtech Benda said in an interview at the Reuters Central & Eastern Europe Investment Summit in May that the Czech housing market is overvalued and CNB needs to start slowing a spiral of prices and demand for mortgages.
"We should see this as a spiral which we need to start curbing somehow, so that we don't get into trouble in five, ten years. Property prices never grow forever," Benda said.
In the rest of Europe, Eurostat figures show that in Lithuania prices rose by 10.2% and in Latvia by 10.1% in the first quarter of 2017 compared with the same quarter of the previous year. On the contrary, prices fell in Croatia (-0.4%) and Italy (-0.1%).
Compared to the previous quarter, Q4 of 2016, house prices in the euro area they rose by 0.4% and in the euro area by 0.7%. The highest increases were recorded in the Czech Republic (+2.9%), Latvia (+2.8%) and Sweden (+2.5%), and the largest decreases were registered in Malta (-5.4%), Slovakia (-2.4%) and Cyprus (-1.4%).