Strong demand for home loans in the eurozone, EU housing prices rise

Net demand for new home loans continues to grow across the eurozone, according to the latest data released by Europe’s monetary authority.

The strong increase, attributed to easing credit requirements and lower interest rates, comes against the backdrop of rising house prices and rents in the EU.

Euro area demand for housing loans increases

Net demand for housing loans in countries using the common European currency has continued to increase strongly in the first quarter of the year, according to the April 2025 euro area bank lending survey, published by the European Central Bank (ECB) this week.

The report claims that declining interest rates in the eurozone have been the main driver of the upward trend, but the authors also think that housing market prospects and higher consumer confidence have contributed as well, although to a lesser degree.

Positive housing market prospects supported demand for home loans in three of the four largest countries in the euro area, with France being the exception – despite improved consumer confidence, its loan and home price dynamics remains lower, the ECB noted.

Meanwhile, banks have eased credit standards with interbank competition cited as the main factor. French banks reported a net easing for the fifth consecutive quarter and their German counterparts did so for the first time since the start of the easing cycle.

Surveyed banks now expect mortgage demand in the major eurozone economies to continue to grow during the second quarter of 2025, although at a slower pace. It should accelerate in France, according to the poll. The tightening impact of non-performing loan ratios on lending conditions for housing should be “very small.”

“Expectations for a further but lower increase in housing loan demand were reported in Germany and Spain, while Italian banks expect unchanged loan demand in the next quarter,” the European Central Bank elaborated.

EU housing prices jump by almost 5% in Q4 of 2024

Meanwhile, home prices in many markets across the European Union have been on the rise as well. Earlier in April, the European statistical office announced a 4.9% increase in the EU (4.2% in the euro area) in the last quarter of 2024 over the same period of 2023.

Rents also rose on annual basis, by 3.2%, an article published by Eurostat highlighted. The statistical bureau revealed that both house prices and rents in the Union have increased compared to the previous quarter of 2024, by 0.8% and 0.6%, respectively.

The steepest rise was recorded in Bulgaria, 18.3% year-on-year in Q4 of 2024. The country has registered a 115% increase in home prices over the past 15 years with the trend accelerating on expectations it will join the eurozone on Jan. 1, 2026, Euractiv noted in a report.

Bulgaria’s growth was almost four times larger than the average EU figure, the European news website highlighted, pointing to the staggering difference with countries like France and Finland which registered a 1.9% decline each during the same quarter.

Eurostat data also shows that between 2010 and 2024, house prices more than doubled in other Eastern and Central European countries as well – Lithuania (+187%), Latvia (+153%), the Czech Republic (+142%), Austria (+112%). And they more than tripled in Hungary (+234%) and Estonia (+228%).

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