FRANKFURT (Reuters) – Demand for euro zone real estate is likely to remain high, driving up prices and raising “affordability issues” for poorer households, the European Central Bank said on Tuesday.

After the COVID-19 pandemic shut much of the global economy, household savings soared and some families, particularly wealthier ones, looked to real estate as a place to put cash they could not otherwise spend.

“Although some transactions driven by excess savings during the pandemic may have already materialised, the large stock of accumulated savings may still boost housing demand over the near term,” the ECB said in an article in its Economic Bulletin.

“This suggests continued strong demand in the housing sector but also possible affordability issues for the lower income quintiles, as expected growth in housing prices has been much stronger than expected growth in household income and the general price index.”

The household savings rate – the portion of disposable income that is not spent – doubled at the onset of the pandemic and remained just below 20% in the first half of the year, far above the 12% to 13% range recorded earlier.

The ECB said around 44% of net savers in the bank’s Consumer Expectations Survey wanted to put aside enough money to make a major purchase, such as property or a car, with families in the highest income quintile most likely to buy property in the coming 12 months.

It said that expectations of easier access to credit in the future and declining mortgage rates were also among the main factors driving interest in property.

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