European real estate agencies in ‘stable’ position

A new report conducted by global credit ratings agency Standard and Poor’s reveals that European real estate agencies are well placed to weather the continent’s ongoing economic problems.

“Standard & Poor’s Ratings Services’ outlook of European real estate companies remains stable, despite weak GDP prospects, continuing high unemployment, and subdued mortgage lending in Western Europe,” S&P analysts said.

Europe

Europe

One of the key reasons for the report’s fairly optimistic outlook is due to a shortage of supply of residential properties compared with demand, particularly in the UK and Germany – two of Europe’s largest economies. Another contributing factor is that there has continued to be a steady pace of lettings activity throughout Europe.

“Beyond the economic crisis the prospects for most of Europe’s housing markets appear more positive, in our view,” the report said. “A shortage of housing supply, coupled with rising populations in The Netherlands, France, and the UK, to name just three, should underpin property prices in the long run.”

The European residential housing market has been weak in recent years as the region’s economy has struggled to recover from the global credit crunch. Recent figures from Eurostat show house prices across the European Union fell 1.4 per cent on the year in the fourth quarter of 2012, a mild improvement from the 1.7 per cent annual drop in the third quarter.