‘House prices’ warning from the European Central Bank

The European Central Bank warned that despite the economic recovery, high prices, especially in the housing market, pose risks to the stability of the financial system.

The European Central Bank (ECB) has published its 6-month Financial Stability Assessment report for the Eurozone. The report stated that as the economy recovers and uncertainties about the COVID-19 outbreak diminish, short-term risks in the financial sector and the real economy decrease, but long-term vulnerabilities continue to accumulate.

The ECB report warned that increased volatility in housing markets, high-risk bonds and cryptoassets and higher-than-expected inflation will create vulnerabilities if interest rates rise sharply.

“Concerns are particularly concerning the high price volatility in the credit, asset and housing markets, as well as the high debt levels in the corporate and public sectors in the wake of the Covid-19 outbreak,” the report said. it was said.

Emphasizing that in the second quarter of the year, the housing prices in the Eurozone realized the highest increase since 2005, it was stated that these sharp increases in housing prices continued to be “a cause for concern”.

In the report, it was stated that the risk of companies going bankrupt or banks going into trouble is significantly lower than six months ago, and it was emphasized that the correction risks in the real estate market in Europe, especially in countries where pre-crisis valuations were high, increased significantly.

In the report, which stated that the negative effects of the ongoing low interest policy in the Euro Area on financial institutions may “worse over time”, it was pointed out that banks will be under pressure to manage the consequences of digital transformation and the transition to a greener economy.

ECB Vice-President Luis de Guintos, whose views are included in the report, stated that the recent economic recovery in the Eurozone alleviated concerns about the distress in economic activity and increased credit risk, adding, “Global supply chain pressures and rising energy prices pose new challenges to the strength of the recovery and the inflation outlook, while many of the world’s As the progress in vaccination in the region has been slow, the risks arising from the Kovid-19 outbreak have not completely disappeared.” used the phrases.


Source: bigpara- GÜNDEM by bigpara.hurriyet.com.tr.

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