EU tracks highest spike in housing prices in nearly two decades

(CN) — For 29.8 million koruna ($1.2 million), you can purchase an 872-square-foot rowhouse a five-minute drive from Prague. While the ad for this four-floor dwelling boasts forest access and potential, the home now costs about 7.45 million koruna ($310,000) more than it would have if bought last year.

While the central European country reported the second highest increase in house prices last year, housing prices across the European Union jumped 10.5% since last year marking the most drastic year-over-year increase in 17 years, according to data released by Eurostat on Friday.

Seventeen of the EU’s 27 members tracked annual house price increases greater than 10%.

Residents in Hungary experienced the greatest increases in annual housing costs, 20%, followed by Czechia, 25%, and Estonia, 21%. With an increase of only 1%, Cyprus reported the smallest increase in house prices, followed by Finland and Italy, both 4%.

Between the last quarter of 2021 and the first quarter of 2022, housing prices jumped an additional 2%.

Malta, Cyprus and Germany all reported quarterly increases below 1%. Between the end of 2021 the first quarter of 2022, Estonia and Hungary each reported 7% increases in housing, the highest in the EU.

Eurostat’s House Price Index follows changes in residential property purchase prices, including apartments, detached houses and row houses.  

Rental prices have also increased over the last decade, but at a much slower rate. Between 2021 and 2022, EU rent increased an average 1.4%.

All in all, rent has increased 17% over the last decade while the cost to buy a home has spiked by 45%. People living in Estonia, Hungary, Luxembourg, Czechia, Latvia, Lithuania and Austria have seen housing prices double since 2010.

Only Cyprus, Italy and Greece reported deceases in housing prices over the last 10 years.

For the last five years, the prices of homes have increased more than inflation in 24 or more EU member states. On average, housing costs rose 16% more than inflation in Czechia, and more than 11% in Luxembourg, the Netherlands and Lithuania.

In addition to housing, the EU has tracked increases in everything from energy costs and agricultural products to wine and hotels.

European economists largely attribute the 30-year inflationary high to latent supply chain disruptions from the pandemic and Russia-Ukraine War which has disrupted the global energy market.

The EU imports more than a quarter of its crude oil from Russia, along with 46% of solid fuel and 40% of natural gas.

Energy only makes up about 10% of EU household spending, while about 40% goes to services and 20% to food, alcohol and tobacco.

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