Consumers in the euro area expect weak growth in real estate prices over the next 12 months, while their forecast for mortgage interest rates is to fall, shows the latest regular survey of the European Central Bank (ECB), conducted in June among 19 000 participants in euro area countries.

Citizens of these countries hope that their nominal incomes will increase in the next 12 months and their expenses will remain unchanged. By the middle of the year, their expectations are for an average 2.7% growth in real estate prices, which is slightly above the level of May, when the forecast was for a 2.6% increase. Households with the lowest incomes continue to anticipate higher house price growth than those with the highest incomes, at 3.2% and 2.4% respectively.

Expectations for mortgage interest rates decreased compared to May – by 0.01 percentage point to 4.8%. As in previous months, households with the lowest incomes expect the highest mortgage rates 12 months ahead. The share of households reporting a tightening (compared to those reporting an easing) of access to credit in the previous 12 months is shrinking further. At the same time, the share of consumers who predict more difficult access to credit remains unchanged compared to May. 

 

Europeans are raising their expectations about growth in their nominal income – in June they expect 1.4% for the next 12 months, compared to 1.2% in May. This optimism spans people of all ages and incomes. At the same time, the forecast for economic growth is negative and the Europeans foresee a drop of 0.9% against expectations of minus 0.8% in May. At the same time, there are expectations of a drop in unemployment and inflation.

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