EU experts see current property prices as risky
The European Systemic Risk Board (ESRB), the financial stability watchdog of the European Central Bank (ECB), sees signs of real estate overvaluation in many EU countries. The ESRB, chaired by ECB President Mario Draghi, published its annual report yesterday warning banks and real estate lenders against losses in the event of a downturn. Rising demand for home ownership has sharply driven up apartment prices and has led to growing debt in private households. The board also considers most European commercial real estate markets to be overpriced and susceptible to crisis. It cites the main reasons being investors’ hunger for yields and the “highly heterogeneous nature of commercial real estate financing.” On the other hand, lending is still experiencing moderate growth or even decline in countries like Germany.
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