Is Europe's House Party Ending, Too? - by Mark Scott
The numbers speak for themselves. Home prices in the euro zone are forecast to rise only 4.9% this year—down from 7.6% in 2006, and the smallest increase since 1998, according to a recent report by Barclays Capital. In some parts of Eastern Europe, prices could decline by as much as 10%. "The markets have slowed down significantly," says Michael Ball, professor of urban and property economics at the University of Reading.
Certainly, Europe's housing market still looks healthier than America's. In the U.S., home prices suffered a 3.2% year-on-year price drop during the second quarter, according to the Standard & Poor's/Case-Shiller Home Price Indices.And unlike their counterparts across the Atlantic, few European lenders engaged in risky subprime mortgage practices.