8/11/2019 American Foreclosures Influence in Europe

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American Foreclosures Influence in Europe

European Central Bank (ECB) has injected not less than 200 billion Euros in August, but the

action of the European institution has not stopped here. Other 2.2 billion took the path of 

foreclosures !arkets, in the conte"t of high #olatilit$ that persists. ECB see!s deter!ined to

keep its %ord and to po%er financial !arkets as long as it is needed.

&espite of apparent si!ilarities, the European real estate !arket appears to be far fro! a

foreclosures crisis of the !agnitude of the '.. one. n addition, the figures speak for 

the!sel#es. t is esti!ated that the real estate prices in the euro area %ill be higher onl$ b$

.*+, co!pared %ith .-+ in 200- and the lo%est le#el of gro%th since **/, according to

data published b$ Barcla$s Capital.

n so!e parts of Europe, prices could drop e#en b$ 0 percents. herefore, the real estate

!arket on the old continent see!s to be !uch healthier than the A!erican one. ales of 

ho!es in the '.. fell b$ 2.2+ in 1ul$ 200, a record percent, and pri#ate construction

co!panies ha#e hired the s!allest nu!ber of %orkers in the past four $ears.

o%e#er, in Europe, the reference interest rates threaten to increase. 3ith the $ear 2004, the

European Central Bank al!ost doubled the !ain reference interest rate, fro! 2+ to + and

 plans another increase for a !onth. 5either the Central Bank of England has re!ained

indifferent and has brought the reference interest to the rate of 4.4+. uch increases ha#e a

refreshing effect on the foreclosures !arkets, %hich %ere once e"tre!el$ hot. n reland, a

countr$ %here housing prices rose b$ 2 percent in 200- and construction of housing %as

+ of econo!$, e"pensi#e houses are onl$ 4.+ this $ear.

One of the conse6uences of the foreclosures crisis in Europe, !ore precisel$ in Britain, is that

700,000 euro is the a#erage price of a house in Britain. he i!pact of !ore stringent

conditions for lending %ill be felt !ore acutel$ in pain, %here the construction industr$

represents 20+ of the entire econo!$.

ousing prices in pain ha#e e"ploded in the last 0 $ears, and !ost bu$ers ha#e contracted

!ortgage loans %ith #ariable interest. pecialists in the area esti!ate that here, housing

 prices %ill be higher b$ onl$ 4.-+, do%n fro! 0.+ as recorded in 200-.

Britain, %hich has a healthier econo!$ than the euro area, has alread$ faced a slo% gro%th of 

the real estate sector, bet%een 200 and 2004.

t is e"pected that the price of houses here to be !ore e"pensi#e %ith /./+, co!pared %ith

*.+ a $ear before. n August 200, the a#erage cost to bu$ a house in Britain is approaching

700,000 Euros. o%e#er, the foreclosures boo! in the '.. apparentl$ has finished.

n Britain, housing prices ha#e increased continuousl$ e#er$ $ear since **-, according to

data sho%n b$ the largest !ortgage lender here, alifa". n fact, housing prices ha#e seen an

e"plosion in !ost de#eloped nations bet%een 200 and 200-. o%e#er, the '8 has

%itnessed the largest gro%th of European countries, *0+ during this period.