CEPI - European Association of Real Estate Professions

In the course of 2011, and already in 2010, it appeared that national markets were responding in variable ways to the consecutive crises, and that the markets were evolving in very different directions. We also take the view that the evolution of prices depended largely on the benefits which the authorities continued or not to confer on purchasers, as well as the cost of money. Some were also asking for stronger support for supply.

In the absence of significant studies on the multiple links and influences between the markets and the dynamic of property on one part, and economy and finance on the other, we must again for the large part speak in terms of perceptions and estimates, which we agree is disturbing in view of the important role of property at directly and indirectly (transactions, management, valuation) in terms of value creation, and its impact on the Single Market as well as the national markets.

Norway, Switzerland and Iceland experienced strong increases in the prices of residential property, but certainly not for the same reasons and without a shared perspective for what will happen in 2012. Ireland and Spain continued to suffer from the effects of excessive levels of construction and mortgage debt. In Finland, Sweden and Denmark we saw a slowdown, in spite of positive economic indicators in 2011. Whereas in Portugal, Greece, Hungary and Italy, countries at the forefront of public debt problems, price falls were moderate.

The United Kingdom and Hungary experienced prices 30% lower than those in 2007. Poland and Spain were estimated to have prices one quarter cheaper on average. Italy remained 12% below the level of prices seen before the crisis; the Netherlands and France saw a deficit of 7 to 10%. On the other hand, Sweden overtook by 5% the level achieved in 2007, and Switzerland evolved with an increase of 14%.

More worrying are the figures relative to the rate of construction and applications for construction permits: a reduction of 44% for the countries of the European Union as a whole; less 85% in Spain and in Ireland, less 70% in Portugal, Greece and Hungary. The Swiss valleys continued to attract construction, on the other hand, with an increase of 36%.

When therefore will there be a return to normality? That is the question the professionals are asking us. Some, on the other hand, ask themselves if we are not experiencing an abrupt change. Should we not accept that we are faced with a new situation in that the conditions of the market have changed, in some cases in a fairly radical way, which obliges us to reflect in new and different ways on the evolution of the property market?

To be continued…