Quantitative easing by the European Central Bank (ECB) will not have much of an impact on Eurozone property markets says the ratings agency Standard´s & Poor´s (S&P), in contrast to some local market experts who expect quantitative easing to give the Spanish property market a boost.
S&P have argued that the ECB’s initiative will have a limited effect on European property markets as interest rates in many countries are already at historic lows. The
Although they do allow that low mortgage differentials, together with a weak Euro and falling oil prices, could boost house prices significantly in some Eurozone markets, that won’t be the case in Spain, where S&P expect house prices to rise just two per cent in 2016. That contrasts with more bullish forecasts from local market experts like Gonzalo Bernardos, who forecasts that Spanish house prices will rise five per cent this year.
The US agency also points out that long-term interest rates will continue at historic lows over the next two years as a result of the programme set in motion by the institution led by Mario Draghi to purchase assets to the value of €60,000 million a month at least until September 2016.
Why won’t the ECB’s stimulus ignite house prices in the Eurozone like similar measures by the Bank of England in the UK? Partly because of the culture of fixed mortgage rates (though not in Spain), but mainly because of the shortage of housing in the UK, which is definitely not the case in Spain outside of some prime areas.