Statistics Explained

Housing price statistics - house price index


Data from fourth quarter of 2021.

Next planned update: 8 July 2022.

Highlights


House prices up by 9.4 % in the euro area and by 10.0 % in the European Union in the fourth quarter of 2021, compared with the same quarter of 2020.

Graph with two lines, showing index levels for the European Union aggregate for 1) House prices and 2) rents, from the first quarter 2010 to the fourth quarter 20221, both starting at 2010=100 (base year).

This article describes the house price index (HPI) in the euro area (EA-19) and the European Union (EU), presenting data on this indicator both at European and Member State level. It also provides examples of possible use of this indicator in relation to other statistics, such as consumer price indices and rent price indices. Finally, a summary description of the methodology used in the compilation of the HPI is given.


Full article


Annual and quarterly growth rates

The HPI shows the price changes of residential properties purchased by households (flats, detached houses, terraced houses, etc.), both newly-built and existing ones, independently of their final use and independently of their previous owners.

The index levels (2015 = 100) for house prices of the euro area and EU aggregates are shown in Figure 1. After a slight increase between the first quarter of 2010 and the second quarter of 2011, house prices showed a sharp decline until the first quarter of 2013. Then, they remained more or less stable until 2014 and rose sharply since early 2015. Both the euro area and the EU follow a similar trend.

Line chart with two lines showing the development of euro area and EU House Prices index levels quarterly, from the first quarter of 2010 to the fourth quarter of 2021
Figure 1: House Prices – Euro area and EU aggregates – Index levels (2015 = 100), 2010Q1-2021Q4 – Source: Eurostat (prc_hpi_q)

The annual growth rate of the euro area and EU HPIs from the first quarter of 2010 to the fourth quarter of 2021 are presented in Figure 2. Looking in detail at the entire period, the annual growth rate for the euro area HPI reached a maximum of +9.4 % in the fourth quarter of 2021 and a minimum of -2.7 % in the first quarter of 2013. For the EU HPI, the annual growth rate reached a maximum of +10.0 % in the fourth quarter of 2021 and a minimum of -2.6 % in the second and third quarters of 2012. Between 2016 and 2019, the annual growth rate has remained rather stable for both the euro area and the EU (between +3.7 % and +5.0 %). Since the first quarter of 2020, the annual growth rate for both the euro area and the EU reached again levels (between +5.0 % and +10.0 %) that had not been recorded since 2006.

Line chart with two lines showing the development of euro area and EU House Prices annual rate of change, from the first quarter of 2010 to the fourth quarter of 2021
Figure 2: House Prices – Euro area and EU aggregates – Annual rates of change, 2010Q1-2021Q4 (%) – Source: Eurostat (prc_hpi_q)

Table 1 presents the quarterly and annual rates of change for the HPI for the most recent four quarters.

Among the Member States for which data are available, fifteen showed an annual increase in house prices in the fourth quarter of 2021 of more than 10.0 %. Prices fell only in Cyprus (-5.3 %). The highest increases were recorded in Czechia (+25.8 %), Estonia (+20.4 %) and Lithuania (+19.8 %). Compared with the previous quarter, decreases were only registered in Denmark (-4.3 %) and Cyprus (-3.1 %), while they remained stable in Finland. The highest increases were recorded in Estonia (+6.6%), Czechia (+5.7 %) and Lithuania (+4.7 %).

Table showing, for European countries and aggregates, the development of House Prices quarterly and annual rates of change from the fourth quarter of 2020 to the fourth quarter of 2021
Table 1: House Prices – Quarterly and annual rates of change, 2020Q4-2021Q4 (%) – Source: Eurostat (prc_hpi_q)


Dynamics in the housing market: uses of the house price index and policy implications

The HPI has been used in conjunction with other macroeconomic statistics to build derived indicators for the analysis of the housing market dynamics.

A well-known example is the deflated (or real) house price index, which is part of the Scoreboard of indicators used in the Macroeconomic Imbalances Procedure (MIP) of the European Commission. See the dedicated section on Eurostat website and ECFIN web page.

The deflated HPI is the ratio between the nominal HPI and an index of consumer price inflation. A consumer price index, such as the HICP, or a national accounts final consumption deflator can be used for stripping out consumer prices inflation from the HPI. The deflated HPI included in the MIP Scoreboard and in this publication uses the national accounts household final consumption deflator. The deflated HPI growth rate is a key variable for the analysis of house price cycles. In particular, a too high growth rate is considered an early warning indicator of tensions in the real estate market signalling the risk of price bubbles. The alarm threshold adopted in the context of the MIP is 6 % of annual growth rate in the deflated HPI. The level of the threshold was established by the European Commission. It was set on the basis of an analysis of historical data on past boom and bust cycles of house prices.

The deflated HPI for the euro area is presented in Figure 3 (quarterly index) and Figure 4 (annual rate of change).

Between 2010 and 2014, the decreasing trend (or negative annual rate of change) reflects the fact that house prices in the euro area decreased or increased less than inflation. In 2015, house prices started to increase more than inflation and, since 2016, house prices increased 3.0 % to 5.3 % more than inflation.

There are significant differences between Member States, as can be seen in Table 2 (annual deflated HPI). Figure 5 illustrates the magnitude of the differences in the annual rate of change for the year 2021.

Between 2016 and 2021, every year, house prices increased more than inflation in 24 to 26 EU countries. In 2021, the highest differences between annual changes of house prices and the annual inflation rate were recorded in Czechia (+16.1 %), The Netherlands (+11.6 %), Luxembourg (+11.2 %), Lithuania (+11.0 %) and Estonia (+10.2 %).

Line chart with one line showing the development of deflated house prices for the euro area, from the first quarter of 2010 to the fourth quarter of 2021
Figure 3: Deflated House Prices – Euro area – Index levels (2015 = 100), 2010Q1-2021Q4 – Source: Eurostat (tipsho30)


Bar chart with 11 bars showing the development of euro area annual deflated house prices rates of change from 2010 to 2021
Figure 4: Annual deflated House Prices – Euro area – Rates of change, 2010-2021 (%) – Source: Eurostat (tipsho10)


Table showing, for each of the 27 EU Member States, the annual rate of change of their annual deflated House Price between 2010 and 2021
Table 2: Annual deflated House Prices – Member States - Rates of change, 2010-2021 (%) – Source: Eurostat (tipsho10)


Horizontal bar chart with 27 bars showing, by country, the development of EU Member States annual deflated house prices rates of change in 2021
Figure 5: Annual deflated House Prices – Member States – Rates of change, 2021 (%) – Source: Eurostat (tipsho10)

Long term trends in House prices and rents

Figures 6 and 7 below show the long term trends of house prices and rents (since 2010).

Over the period 2010 until the fourth quarter of 2021, in the EU, rents increased by 16.3 % and house prices by 41.6 %. Rents and house prices in the EU have continued their steady increase in the fourth quarter of 2021, going up by 1.3 % and 10.0 % respectively, compared with the fourth quarter of 2020.

Between 2010 and the second quarter of 2011, house prices and rents in the EU followed similar paths, but since the second quarter of 2011, those paths have diverged significantly. While rents increased steadily throughout the period up to the fourth quarter of 2021, house prices have fluctuated considerably.

After a sharp decline between the second quarter of 2011 and the first quarter of 2013, house prices remained more or less stable between 2013 and 2014. Then, there was a rapid rise in early 2015, since when house prices have increased at a much faster pace than rents.

When comparing the fourth quarter of 2021 with 2010, house prices increased more than rents in 19 EU Member States. House prices increased in 24 EU countries and decreased in three, with the highest rises in Estonia (+156.3 %), Hungary (+128.4 %), Luxembourg (+123.8 %), Latvia (+114.5 %), Czechia (+110.7 %), Austria (+108.9 %) and Lithuania (+108.3 %). Decreases were observed in Greece (-22.8 %, see notes), Italy (-11.9 %) and Cyprus (-8.5 %).

When comparing the fourth quarter of 2021 with 2010 for rents, prices increased in 25 EU Member States and decreased in two, with the highest rises in Estonia (+171.4 %), Lithuania (+112.6 %) and Ireland (+73.6 %). Decreases were recorded in Greece (-24.9 %) and Cyprus (-1.3 %)

Line chart with two lines showing the development of EU house prices and rents index levels quarterly, from the first quarter of 2010 to the fourth quarter of 2021
Figure 6: House prices and rents – EU – Index levels (2010 = 100), 2010Q1-2021Q4 – Source: Eurostat (prc_hpi_q); (prc_hicp_midx)


Horizontal bar chart with 32 double bars showing the development of 1) house prices and 2) rents in the EU and euro area aggregates, the 27 EU Member States, and Iceland, Norway and Switzerland, expressed in percentage changes between 2010 and the fourth quarter of 2021
Figure 7: House prices and rents – Changes between 2010 and 2021Q4 (%) – Source: Eurostat (prc_hpi_a); (prc_hpi_q) (tipsho20); (prc_hicp_aind); (prc_hicp_midx)

Weights for the calculation of house price indices

Weights for the euro area and the EU

The House Price Indices (HPI) for the euro area and EU aggregates are calculated as weighted averages of the national HPIs, currently using as weights the GDP at market prices (based on PPS) of the countries concerned. The weights used in 2021 are based on data for 2020.

HPIs are computed as Laspeyres-type annual chain indices allowing weights to be changed each year.

Figure 8 shows the 2020 weights used for the calculation of the 2021 EU HPI aggregates.

Doughnut chart showing in percentage, the weights of each of the 27 Member States in the house prices EU aggregate, in 2020
Figure 8: Weights of Member States in the EU House Prices aggregate, 2020 (%) – Source: Eurostat (nama_10_gdp)

Figure 9 shows the 2020 weights used for the calculation of 2021 the euro area HPI aggregates.

Doughnut chart showing in percentage, the weights of each of the 19 euro area Member States in the house prices euro area aggregate, in 2020
Figure 9: Weights of Member States in the euro area House Prices aggregate, 2020 (%) – Source: Eurostat (nama_10_gdp)

Weights for new and existing dwellings sub-indices

In addition to the price index for total dwellings transacted in the market, Eurostat publishes separate indices for newly built and existing dwellings. The separation of dwellings into newly built and existing is relevant due to their often different price evolutions. Due to limited data availability, no European aggregates are compiled for these sub-categories.

The weights of the indices for new and existing dwellings are disseminated as parts per thousand of the expenditure (with total dwellings = new dwellings + existing dwellings = 1 000). The weights for the 2021 indices are illustrated in Figure 10, for available countries.

Bar chart with 27 bars, showing the split weights of new and existing dwellings over total dwellings in 26 EU Members States and Norway, in 2021
Figure 10: Weights of new and existing dwellings in total dwellings – Member States, 2021 (‰) – Source: Eurostat (prc_hpi_inw)

Source data for tables and graphs

Data sources

Methodological background information is given in the Handbook on Residential Property Prices Indices (RPPIs) .

Compilation

The first and most important issue in the compilation of HPI is the availability of data on dwelling purchases. This refers to information about the price of the transaction and the dwelling characteristics. The dwelling characteristics which most influence price are the type of dwelling (flat, detached house, terraced house, etc.), its size and location. A second issue is the heterogeneity of the housing market, where virtually every dwelling bought and sold is different from the others in some respect. The consequent quality adjustment from one time period to the next is also a major methodological issue in compiling house price indices. The HPI should be seen as an independent price index aimed at measuring price developments for dwellings transacted in the market. The main technical characteristics of the HPI are:

  • the price of land is included in the price and in the weight (gross acquisition concept);
  • only actual transactions of dwellings are covered;
  • market prices for residential properties are covered, while non-market prices are ruled out of the scope of the HPI; meaning that self-built dwellings are excluded, with the possible exception of turnkey pre-fabricated houses;
  • the focus is on the measurement of price developments for all residential properties purchased by households, independently of their final use; so dwellings bought by households for uses other than owner-occupancy are included, for example for investment;
  • all purchases of new and existing dwellings are to be considered, independently of their previous owner; so existing dwellings transacted between households are included.

Prices cover the acquisition cost of a property in itself, and not the total cost that is necessary to acquire, own and maintain a residential property; so other costs related to the acquisition of the property and major repairs are ruled out from its scope.

Context

The basic act providing for the compilation of the House price index (HPI) and the Owner-occupied housing price index (OOHPI) is the European Parliament and Council Regulation (EU) 2016/792 of 11 May 2016.

The basic act is implemented by Commission Regulation (EU) 2020/1148 of 31 July 2020.

In the context, of this publication, the terms 'residential property price', 'house price' and 'dwelling price' are used interchangeably to describe the price developments of all residential properties purchased by households (flats, detached houses, terraced houses, etc.), both new and existing, independent of their final use and independent of their previous owners. The emphasis is on market prices, with non-market prices being ruled out from the scope of the house price indices (self-build dwellings are therefore excluded). The price of dwellings follows a gross acquisition concept, i.e. it includes the land price component.

Notes

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