House prices fell in the eurozone at the end of the last year despite an acceleration in the region's economic recovery, hurt by falling prices in Spain and Italy, data showed on Thursday. Eurozone residential property values dropped by 0.7 percent quarter-on-quarter in the October to December period, the EU's statistics office Eurostat said, after two straight quarterly rises of 0.4 percent.
Compared with the same period of 2012, prices of houses fell 1.4 percent in the three months to December, following a 1.3 percent decline in the previous quarter. On a quarter-by-quarter basis, the decline in property prices was led by a 1.3 percent drop in Spain and a 1.2 percent loss in Italy. France, the euro zone's second-largest economy, saw prices fall 1 percent on the quarter. They had risen 0.9 percent in the three months to September.
The bursting of property bubbles in Ireland and Spain - and to a lesser extent, the Netherlands and Portugal - erased years of economic growth and left banks with trillions of euros of bad loans. Despite record low interest rates, many households are struggling to obtain financing to buy properties. Banks remain cautious about retail and corporate lending, wary that the economic recovery and banks themselves remain fragile.
However, Spain, Italy and France all saw a deceleration in the pace of the decline in prices on the year-on-year basis. Data for Germany, Europe's strongest economy, was not available for the fourth and third quarter. It grew following the year-on-year expansion in the first two quarters of 2013.
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