博鱼体育集团

How many interest rate cuts is it going to take to revive economies in Europe?

The outlook is precarious. France and Germany, which make up almost half of the Eurozone's economic output, are in turmoil. The possible downside scenarios from various geopolitical uncertainties, not least a Donald Trump presidency, remain stark.

The European Central Bank executed its fourth cut of the year yesterday, taking the key rate to 3%. The Swiss National Bank made a surprise half-point cut to 0.5%. ECB President Christine Lagarde wasn't as dovish as investors had expected, but consensus is now that ECB policy will divert meaningfully from the Federal Reserve and the Bank of England - the question is by how much.

Both the Fed and BoE are seen lowering borrowing costs by around 80 basis points through the end of next year, compared to about 125 basis points for the ECB - that would take the rate to 1.75%. Fidelity and reckon the deposit rate will fall to 1.5%. Analysts at bond trading giant Pimco think policymakers will go .

Prime European forecasts

Questions as to how far the ECB and its European central banking peers will need to go to revive growth will be vital for housing markets. We see different levels of growth occurring in prime markets across the continent - you can read our forecasts here.

Stockholm leads our table, with growth of 6% over the next twelve months. Having experienced a 13% decline from its June 2022 peak, the Swedish capital is now poised for recovery. The Riksbank鈥檚 four cuts in six months have slashed the policy rate from 4% to 2.75%, improving market sentiment.

Following Stockholm is the Iberian trio of Marbella (5%), Madrid (5%), and Lisbon (4.5%). The IMF expects the region鈥檚 economies to outshine many in the Eurozone, while prime buyers continue to seek lifestyle enhancements post-pandemic, tying their housing markets' fortunes to more successful economies elsewhere. From hybrid work opportunities to sunny climates and top-tier international schools, these destinations are ticking all the right boxes for global investors and relocators.

You can read 博鱼体育集团 Frank's outlook for European commercial markets here.

Calling a truce

Sterling hovered close to its highest level against the euro since Brexit as investors digested the outlook yesterday.

The pound鈥檚 rise 鈥減oints towards the fact that, in the absence of any banana skins, sterling is on a long-term recovery trajectory鈥�, Joe Tuckey, head of FX analysis at Argentex . This had been driven by a 鈥渃omparatively brighter economic outlook, and a less dovish central bank鈥�, he added.

Indeed, the Bank of England is expected to hold the base rate at 4.75% next week. Mortgage markets have already fallen quiet after another turbulent year, with lenders holding rates static for the past fortnight. That truce will probably hold through to the new year at least.

All of this suggests we'll continue to see a modest recovery as we move into 2025. Metrics covering new buyer demand, new instructions and house prices remain in expansionary territory, according to November's RICS . We think UK house prices will climb 3% next year.

In other news...

Targets for affordable housing on greenbelt weakened in English planning reform (), UK consumer confidence touches 4-month high in December (), and finally, US mortgage rates drop for a third week ().