- With the euro zone's housing market stagnating, high interest rates and low affordability are preventing first-time homebuyers in Europe.
- Renters are also feeling the pinch, with over half (54%) struggling to find a property within their budget.
June 19, 2024 – High interest rates and unaffordable down payments are putting many Europeans off buying their first home, while high rents put further pressure on those who don't own their own home. With economic indicators pointing to an improving euro zone economy, including the European Central Bank's interest rate cut in June, improving home affordability could be key to jumpstarting the sluggish housing market.
This is according to a new survey of 5,000 European consumers conducted by Adevinta, a leading online classifieds group that plays a key role in the European real estate market. Adevinta operates specialist real estate marketplaces such as Fotocasa and habitaclia (Spain), as well as general marketplaces with strong real estate offerings such as leboncoin (France) and Kleinanzeigen (Germany).
While homebuying is still considered financially prudent and desirable, savings barriers and high interest rates prevent people from buying a home.
In most European markets surveyed, buying is still seen as the smartest financial choice compared to renting, with half of respondents (47%) believing so, although in Germany, where the rental market is more structured and popular than in the rest of Europe, this figure drops to 35%.
However, despite a clear desire to own property, 64% of European non-homeowners claim they cannot save up enough for a down payment to buy a home. The rising cost of living is also dampening savings expectations, with 58% not expecting to be able to save up a down payment for a purchase within the next three years.
High interest rates are also a major barrier: mortgage rates in the eurozone have almost tripled in the past two years, and 58% of non-homeowners feel they cannot secure a mortgage because of high interest rates.
Affordability issues also increasing in the rental sector, with Southern Europeans feeling the most financial hardship
The majority of Europeans who don’t own their home (62%) claim they are only renting because they cannot afford to buy.
But renting is not the 'easy way out': as rising living costs continue to take a toll on consumers' wallets, more than half (54%) of non-homeowners claim they are struggling to find a rental property within their budget, a figure that rises to 63% in Spain.
Furthermore, 58% of Europeans believe that rents and property prices are too high to live where they would like to live, suggesting that housing costs are having a negative impact on quality of life across the eurozone.
In Italy and Spain, a sense of financial hardship is particularly prevalent, with people reporting having to go over their budget to afford housing. In Italy, people report wanting to spend up to 22% of their monthly income on housing, but in reality they spend 28% on a mortgage and 27% on rent. In Spain, people report wanting to spend no more than 25% of their monthly income on housing, but in reality they spend 28% on a mortgage and 30% on rent.
Roman Campa, Head of Real Estate and Emerging Industries at Adevinta and CEO of Adevinta Spain, commented: “We are delighted to be partnering with Adevinta in this exciting new venture.
“While there are nuances between countries, our data shows that prospective homebuyers across Europe are facing significant challenges to buying a home. The good news is that the outlook is finally brightening. If inflation continues to fall and interest rates continue to be cut, we may see more prospective homebuyers step onto the home-buying ladder for the first time or get their foothold in the door in key European markets such as France, Spain, Italy, Germany and the Benelux. This could mean both more opportunity and more competition for prospective homebuyers.
“As always, choosing the right time to move is an important decision. In a competitive home-hunting environment, real estate agents and marketplaces have a vital role to play in giving people as much information and choice as possible, making the search journey easier. Finding a place to call home should be an achievable and enjoyable experience, regardless of external economic conditions.”
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For further information, please contact:
First Light Group
contact address
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methodology:
The online survey was fielded among 5,179 respondents (aged 16+) in Germany, Spain, France, Italy and the Benelux countries between 30 April 2024 and 7 May 2024. The survey was commissioned by Adevinta and carried out by market research consultancy Censuswide, which adheres to the rules of the Market Research Association based on the ESOMAR principles and employs its members.
