Filtered by Region: Europe Use setting Europe
The proposed extension to the Mortgage Guarantee Scheme could prove a good counter-cyclical policy in areas where house prices are relatively low. But the scheme has far less impact in London and the South where a much bigger deposit than 5% is needed to …
25th October 2023
We suspect that more weakness in the housing market will weigh on real GDP by further reducing residential investment and consumer spending. This is one reason why we think the economy is close to a mild recession, if it isn’t already in one. Higher …
The euro-zone money and credit data have been very weak all year and September’s data, released this morning, were more of the same. The activity surveys are now turning downwards too, supporting our below-consensus forecasts that the economy contracted …
This page has been updated with additional analysis from the post-meeting press statement and press conference. MNB slows the pace of easing, but only slightly The Hungarian central bank’s (MNB’s) larger-than-expected 75bp cut to its base rate, from …
24th October 2023
We expect euro-zone export growth to remain weak in the coming months against a backdrop of slow economic growth in key export markets and a stronger euro. Euro-zone exports recovered well from the pandemic, outperforming the wider economy since late …
Anticipation of legislation requiring minimum standards of energy efficiency is already impacting CRE values as investors price in transition risk and this pressure is likely to ramp up in the coming years as compliance deadlines harden. This note …
19th October 2023
We'll be discussing the implications of the end of the ultra-low interest rates era and the rise in r* in an online Drop-In at 12:30 GMT on Tuesday 31st October. (Register here .) As our new higher estimate of the real neutral interest rate, or r*, for …
There is a growing body of evidence that suggests wage pressures are past their peak, but it’s not clear how quickly wage growth will slow. The gradual loosening in the labour market and the experience in the US suggests that UK wage growth may ease only …
18th October 2023
We have recently published detailed analysis arguing that equilibrium interest rates in advanced economies are now higher than they were before the pandemic, and that they will continue to rise over the rest of this decade. (See here .) The key …
17th October 2023
Switzerland’s government looks set to remain largely unchanged after the federal elections this Sunday, and we do not expect a significant change in economic policy. But voters’ grievances about the failure of Credit Suisse will keep the pressure on …
The exit poll from Poland’s parliamentary election on Sunday suggests that the incumbent PiS will fall short of forming a majority and that the pro-EU opposition will be able to form a coalition government. This would help to improve relations with the EU …
16th October 2023
Spanish inflation doubled from 1.6% in June to 3.2% in September and is likely to rise to over 4% by the end of the year. However, ECB policymakers won’t be too concerned as the increase is largely due to rising energy inflation while core inflation looks …
13th October 2023
Industrial rental growth in the Nordics is set to slow in 2024. But a brighter macroeconomic outlook and tight vacancy will help rent growth to outperform the euro-zone. Further ahead, the current high level of online adoption relative to the euro-zone …
Surging interest rates caused mortgage demand to slump in Q3 at the same time as rising defaults led lenders to tighten mortgage credit conditions. Similarly, it became more difficult to secure commercial real estate loans. We expect availability of …
12th October 2023
Higher interest rates weighed sharply on households’ demand for mortgages in Q3 and banks expect demand for mortgages to fall further in Q4. This is a clear sign that higher interest rates are working. And our forecast that mortgage rates will stay above …
We think euro-zone equities’ recent run of underperformance relative to those in the US will extend over the next couple of years, as bond yields fall back and enthusiasm around “AI” continues to grow. With the bond market sell-off seemingly having abated …
Surveyors reported the most widespread price falls since February 2009 in September as mortgage rates of over 5% took their toll. Looking ahead, a further slide in house prices appears inevitable. The drop in the past prices balance to a fresh 14-year low …
There may be more political support for the creation of a Central Bank Digital Currency (CBDC) in the European Union than in some other economies. However, it is still uncertain whether it will ever see the light of day or whether there would be much …
11th October 2023
Labour has made housing a major theme of its conference, and the party’s attitude towards New Towns and social housing means that the next election could prove a turning point in the structure of the UK housing market. Over the past 30 years successive …
10th October 2023
The recent shift towards looser fiscal policy in Italy and increase in sovereign bond yields once again have raised concerns that investors may lose confidence in Italy’s ability to sustain its debt burden. We don’t think this will morph into an acute …
9th October 2023
The scale of the rise in bond yields over recent weeks has provoked worries about the impact on real estate. The sell-off presents an upside risk to our yield outlook, but we think falling inflation will help bond yields across the region to soon fall …
Becoming liable for the EU’s carbon border adjustment mechanism (CBAM) would nullify any cost-reduction benefit from a lower carbon price for UK companies that trade closely with the EU. That said, the CBAM would have less impact on domestically-focused …
6th October 2023
While we think the risk of a material increase in euro-zone “peripheral” spreads has risen, our central forecast remains that they will end 2024 a bit below their current levels. Last week, long-dated euro-zone peripheral bond yields reached highs not …
5th October 2023
The resilience of investment in the euro-zone to higher interest rates and slowing economic growth at the start of the year appears to have been driven in part by the gradual clearing of backlogs in various industries. This has now come to an end and we …
4th October 2023
While some measures of optimism have been improving, the majority of the survey evidence suggests the economy is weakening and the chances of the mild recession we have been forecasting have increased. The 0.5% m/m fall in real GDP in July and the decline …
Buying a first home has become increasingly difficult over the past 30 years. A high income is still essential, but other circumstances such as whether the individual is buying as part of a joint-income couple or has significant family wealth have become …
2nd October 2023
We suspect that before the end of the year, the ECB will announce that it will end PEPP reinvestments before the end of 2024. This would allow the ECB to shrink its balance sheet more quickly and reinforce the message that monetary policy will remain …
Fair value calculations combine valuation analysis with a forward-looking view of rents. As such, these estimates reinforce our existing view that there is scope for declines in euro-zone yields, albeit limited. They also confirm that these falls are very …
29th September 2023
The Italian government’s decision to raise its deficit targets suggests it is trying to get away with as little fiscal tightening as possible. With EU fiscal rules set to come back into force next year, that raises the risk of tensions escalating between …
As we anticipated , housing starts in England spiked to their highest level on record in Q2 as builders began work early to avoid having to conform with the Future Homes Standard. More timely monthly data show that starts slumped in July and August in …
28th September 2023
The latest euro-zone money and credit data show that tighter ECB policy is continuing to weigh on households’ and firms’ borrowing, as well as influencing what they do with their savings. The weakness in money and lending growth supports our view that the …
27th September 2023
The Hungarian central bank (MNB) delivered another 100bp interest rate cut (to 13.00%) and simplified its monetary policy toolkit at today’s meeting, paving the way for the second phase of the easing cycle in the coming months. The hawkish tone of the …
26th September 2023
The weakness in German construction activity has raised questions about whether a slowdown in new office supply could offset the weakness in demand and prevent a rise in vacancy. But we think that on balance it won’t be enough and that rental growth will …
The sharp slowdown in broad money growth since late last year suggests that higher interest rates are working by reducing households’ and firms’ demand for borrowing, which should lead to softer activity and lower inflation. This supports our view that a …
The following is a presentation that our Chief Property Economist Andrew Burrell gave to the District Conference in Barcelona on 21st September, 2023. … Where next for euro-zone …
22nd September 2023
With most European G10 central banks now at, or very close to, the ends of their tightening cycles, this note examines where the European G10 currencies stand and how we see the outlook for the main euro cross-rates. In short, we think the Swiss franc …
Despite ending the interest rate hiking cycle today, the Monetary Policy Committee (MPC) succeeded in convincing financial markets that interest rates will remain high for some time. As market interest rate expectations determine fixed mortgage rates, the …
21st September 2023
Note: We’ll be discussing September’s Fed, ECB and Bank of England policy decisions in a Drop-In at 3pm BST today. Register here to join. The surprise decision by the Bank of England to leave interest rates unchanged at 5.25% today probably means that …
The SNB’s decision to keep rates unchanged at 1.75% was a surprise. Although the Bank left the door open for further hikes, we think rates are now at their peak. And with inflation set to fall further, we expect the SNB to start cutting rates next year. …
Following today’s rate hikes, the Riksbank and Norges Bank are now at, or close to, the end of their tightening cycles. Both central banks’ new projections suggest that they are more likely than not to raise rates one more time. But whether or not they …
The problems of WeWork, which have intensified in recent months, do not look reflective of significant distress in the wider flexible office market. However, flex has yet to see much of a boost from greater hybrid working and may not be immune from …
19th September 2023
There’s a lot of uncertainty about how much impact monetary tightening has had in the global economy so far, but in Central and Eastern Europe (CEE) the hit to households has already been significant and we estimate that almost all of the impact from …
18th September 2023
We think Norges Bank will go through with its plan to raise its policy rate by 25bp next week, to 4.25%, and signal that its tightening cycle is over. It is then likely to will wait until around the middle of next year before cutting interest rates, but …
15th September 2023
Given our dovish view of monetary policy in Emerging Markets (EMs) – and our increasingly less bearish view of the US economy – we think that EM local-currency government bond yields will fall across the board in the next couple of years, particularly in …
14th September 2023
The Riksbank looks all but certain to follow the ECB’s example and raise its key policy rate by 25bp next week, to 4.0%. However, while that could mark the end of its tightening cycle, on balance we think It is more likely to deliver one last hike, in …
On balance, we think the SNB will look through the recent low inflation and hike rates by 25bp one last time to 2.00%, given policymakers’ previous hawkish commentary. But with the economy stagnating in Q2 and wage growth suppressed, we would not be …
Today’s 25bp rate hike by the ECB probably brings its tightening cycle to an end. Given our view that underlying inflation will ease only gradually even though the euro-zone is heading for a recession, we think policymakers will leave rates at this record …
Depressed activity remains consistent with falling house prices The further deterioration of the RICS survey figures in August suggest the peak in mortgage rates seen in July are continuing to dampen demand. And as we don’t think rates will fall …
Over the last year or so, spreads over sovereign yields have narrowed to their lowest since the euro-zone debt crisis. But while these are expected to widen again over the next year, mostly thanks to falling bond rates, they look set to stay well below …
13th September 2023
After a strong 2022, annual office rental growth has slowed in Italy in H1 2023. And given the contraction in employment we are forecasting, together with increased supply, we think prime rents will largely stagnate both in Milan and Rome until 2025. …
12th September 2023
