Investment in housing reactivates in the European Union

Investment in housing showed signs of recovery in the European Union during the first quarter of 2021, reported the European Central Bank (ECB).

In general, investment in housing is expected to have maintained its resilience in the first quarter of 2021, in a context of considerable uncertainty caused by the further tightening of restrictions related to the pandemic.

After experiencing a strong rebound in the third quarter of 2020, residential investment continued to increase in the fourth, although its growth rate slowed markedly.

Based on a report from the ECB, recent economic and opinion indicators suggest a pattern of continued moderation in growth in the first quarter of 2021.

The construction production index fell in February, and its average value in January and February was 0.4% below that observed in the fourth quarter of 2020.

At the same time, the construction sector activity PMI improved in the first quarter of 2021, especially in the residential segment, although it remained in contractionary terrain.

Investment in housing

The European Commission’s construction confidence indicator also exceeded the level registered in the previous quarter and was well above its long-term average in the first quarter of the year.

According to data from European Commission surveys on the factors that limit production, supply factors – such as weather conditions and the availability of work and materials – made construction activity difficult at the beginning of the year.

However, demand constraints were less relevant, which is also in line with a further improvement in companies’ valuations of their foreign order book levels.

Still, according to the Bank Loan Survey (BLS), demand for home purchase loans moderated in the first quarter of 2021, although it is expected to increase again in the second quarter.