Euro area residential property price dynamics gained further momentum in 2017. In the third quarter, the annual rate of change in the ECB’s residential property price indicator was 4.4%, up from 3.9% in the previous quarter. This acceleration is fairly broad-based across euro area countries, albeit at different levels of house price growth, with two countries still exhibiting negative annual rates of change in the third quarter and another two with rates of more than 10%. The house price increases over the past few years may have implications for housing affordability. Affordability essentially concerns housing costs relative to income. Whether these costs are affected by house price increases typically depends on how a household describes itself, be it as a buyer, an owner, or a tenant. At the aggregate level, house prices have recently increased slightly faster than household disposable income, suggesting a worsening of average affordability (see Chart B). However, this would apply in the first instance to those who have recently bought, or plan to buy, a house or a flat at higher prices. At the aggregate level, the debt servicing burden can be gauged by the ratio of interest payments to disposable income.16 Reflecting low-interest rates, this ratio has gradually decreased in the past few years across euro area countries. The effect of higher house prices has thus been alleviated by lower interest burdens. For households that already own a home, the rise in house prices may even have increased affordability if the higher collateral value of the property reduces borrowing costs when housing loans are renegotiated.