Italy, Spain and Portugal have seen a particular development of the real estate and secondary mortgage market compared to the rest of Europe. According to the European Mortgage Foundation, last year ended with economic and inflationary changes that generated very different dynamics in different territories. Here are the main development trends of the mortgage and real estate market in Europe, particularly in the southern countries, according to the EMF.
Residential market in Europe
The sum of European residential mortgage stocks continued to expand in Q4 2022, but at a slower pace of growth since the onset of the pandemic in Q1 2020. Meanwhile, gross residential lending continued to contract on an aggregate level for the third consecutive quarter, as new mortgage supply and demand became less dynamic across the EMF sample of countries. Even the real estate markets were quite diversified, although most participating jurisdictions reported a deceleration in planning permission and building starts and completions, or a clear contraction in these indicators. In turn, EMF average house prices increased again in Q4 2022, although the annual pace of growth (i.e. compared to Q4 2021) significantly decreased, clearly reflecting the heterogeneity of price trends in different European regions.
Mortgage market in Europe
Total mortgage stocks in the EMF sample amounted to approximately €8.24 trillion at the end of the fourth quarter of 2022. Despite the additional gains recorded during this period, continuing the upward trend that began in 2017, the pace of growth has slowed significantly. Indeed, the European stock of mortgages increased by 1.9% in Q4 2022 compared to the same quarter of the previous year, after an annual increase of 3.1% in the previous quarter. Against this backdrop, overall gross disbursement in Europe decreased by -12% yoy in Q4 2022, after a year-on-year contraction of -6% a quarter earlier. This is the third consecutive quarter with a negative growth rate. Total gross disbursement amounted to €331 billion, the lowest level since the start of the pandemic in Q3 2020.
Mortgage market in Portugal
In Portugal , total outstanding residential loans increased by 3.4% YoY (0.1% QoQ), reaching €101.4 billion at the end of Q4 2022. The production of new residential loans was €3.8 billion in Q4 2022, signaling an annual decrease of -3.0%.
Mortgage market in Spain
In Spain , gross issuance in Q4 2022 remained roughly unchanged compared to volumes issued in the same period of the previous year, which could suggest a turning point after posting double-digit positive rates since the pandemic. In 2022 as a whole, new lending volumes exceed €65bn, a level not seen since 2011, after posting an annual increase of 10%. As regards mortgage repayments, Q4 2022 saw some positive evolution under the pressure of an increase in Euribor, accounting for 5.4% of new loans compared to 2% in previous quarters.
Mortgage market in Italy
In Italy , outstanding mortgage disbursements stood at approximately €427 billion at the end of the quarter, an increase of more than 4% over the same quarter a year earlier. Gross residential mortgage origination increased 17% from the prior quarter. If compared with the previous year, the data show a decrease of -6%.
