House prices are expected to fall “in the coming months”, predicts rating agency Moody’s and reported by ECO. But even so, the drop in prices “will still be insufficient for housing to be affordable in most European capitals”, especially for those buying a home for the first time. In Lisbon, last year, it took just over 15 years of wages to pay for a house. And for housing credit to be accessible, the value of properties must fall by 16.85%.

According to data from the North American agency, in the last 18 years, housing prices in Lisbon were lowest between 2012 and 2016, when a maximum of ten years of wages were needed to pay for a house.

“The number of years of wages needed to pay for housing, in most European capitals, has been increasing in the last decade. And large cities are reaching the minimum affordable price levels of the last 17 years”, warns Moody’s Investors Service report that outlines the European housing scenario. The exception is Dublin, Madrid, Stockholm and Rome, which highlights the agency.

In Paris, for example, “although it takes more than 15 years of wages to pay for a house, since 2020 the trend has been decreasing”, the document also states, which states that Amsterdam and London continue to be the European capitals less accessible for those looking to buy a home, but “other cities such as Berlin, Frankfurt, Lisbon and Milan have seen a drop in the supply of affordable housing in recent years”.

Moody's analysis also states that “despite the reduction in housing prices and the rise in wages, in most large European cities the ability to pay housing credit remains weak due to the loss of disposable income” of families, which results in “the rising cost of living and rising interest rates”.

Given this scenario, the drop in prices predicted for 2024 “will not be enough for prices to be affordable”, points out the document. For this to happen and to “restore the average credit repayment capacity in each European city, between the period 2010-22”, it will be necessary to reduce house prices in the order of 31.51% in Frankfurt, from 29.58 % in Berlin or 24.60% in Amsterdam, these being the biggest drops.

In Lisbon, prices need to fall by 16.85%, followed by Stockholm where a 16.68% drop in values would be necessary. In Madrid, the drop would be 6.74%, in Paris 7.65% and in Milan 8.10%. Rome is the only European city where no correction in values is necessary for houses and housing loans to be affordable.