The house price index and its evolution in EU countries
The House Price Index (HPI), monitoring of which we include in this section for the first time, is compiled by the CZSO in accordance with a single harmonised EU standard. It measures quarterly developments of the transaction prices of apartments, family houses and related plots of land bought by households. This index has the advantage of being internationally comparable1 but the possible disadvantage of containing shorter time series than alternative data sources.2 HPI data for EU Member States are published by Eurostat.
According to this data, house prices in the broader group of European countries are rising. The Czech Republic is slightly above the EU average in this respect (see Chart 1). House prices have long been increasing in some of the EU countries that recorded the strongest annual growth at the end of 2014 (Sweden, Austria and Germany). In other countries, prices have started rising again after previous declines related to the global financial crisis (the UK, Ireland and Estonia). The growth in house prices in Sweden (14% year on year) was accompanied in past years by an easing of credit standards, with a high proportion of mortgage loans lacking continuous principal amortisation.3 The ability to buy on credit at higher prices thus simultaneously pushed prices higher. The house price growth in Austria, Germany, Ireland and Denmark (6%–7% year on year) contains significant regional differences, with faster price growth recorded in the capital city or several large agglomerations. A partial influence of demand from abroad is mentioned in this context.4 The high purchasing power of this demand causes prices of residential property to rise, making it less affordable for residents. However, there are also countries in the EU where house prices are flat or falling, such as Cyprus and Italy (declines of up to 1% year on year).
Chart 1 (BOX) House prices in selected EU countries
House prices in the Czech Republic are rising slightly faster than on average in the EU, where, however, the growth is very mixed
(annual percentage changes; source: Eurostat)
1 See the description of the CZSO methodology (in Czech only) at https://www.czso.cz/csu/czso/ceny_bytu.
2 Data for a broader group of countries have been available since 2008.
3 The requirement for continuous principal amortisation for new loans secured by residential property by the Swedish supervisory authority enters into force on 1 June 2016.
4 ECB (2015): Financial Stability Review, November 2015.