LISBON: Property markets in Europe are likely to see some softening this year and next with mixed fortunes for many countries and the UK facing Brexit risks, according to a new analysis. Supply shortages will help keep momentum going in some markets, particularly in Portugal and the Netherland which, along with Ireland, will lead property price growth, says the S&P market report. It predicts that all the main nations will see house price growth in 2018, 2019 and 2020 but to a varying degree. In 2018 annual price growth is forecast to be highest in Portugal and Ireland, both at 8.5%, followed by the Netherlands at 7%. It also forecasts annual growth of 3.5% in Spain, 3.4% in Belgium, 3% in Germany, 2% in France, 1.8% in Switzerland, 0.6% in Italy and 0.5% in the UK. In 2019 Portugal is likely to lead price growth at 7%, followed by Ireland at 6%, the Netherlands at 5.3%, Spain at 3%, Germany at 2.7%, Belgium and France both at 2%, Switzerland at 1.9%, and Italy and the UK both at 1.5%. Looking ahead to 2020 the forecast is for annual price growth of 6% in Portugal and Ireland, growth of 3.6% in the Netherlands, followed by 3.5% in the UK as the expected Brexit effect lessens, then a rise of 3% in Spain, 2.5% in Germany, 2.3% in Switzerland, and 2% in Belgium, France and Italy. The report says that overall the UK housing market activity continues to broadly stagnate and a very limited number of properties on the market continues to underpin prices while affordability is set to remain extremely stretched in some areas, especially in London. In terms of supply, it explains that the positive trend of net additions to the housing stock continued in 2017 and, judging by the number of developments in the pipeline, should continue into 2018. But these improvements come from low levels and are still off the estimated number required to satisfy housing needs. There are concerns that as Brexit approaches, developers might delay or shelve currently planned projects, translating into slower supply growth. The big unknown is Brexit. The report says that should it emerge during 2018 that key service sectors’ access to the EU market will be more restricted post-Brexit than currently assumed in the forecast, this would likely affect house prices more negatively, especially in London where exposure is greatest. Despite a vibrant economy, the report forecasts that a slowdown in demand in Germany could result in a moderation in price growth while in Ireland a housing shortage will keep prices high. In Italy the gap between supply and demand should close gradually, resulting in a further reduction in selling time and price discounts and, ultimately, lift house prices.
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