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FrankfortRising real estate prices are worrying the European Central Bank. Monetary leaders have discussed this aspect of the danger in their recent report on financial stability. "We now think that there is a slight overvaluation," said ECB Vice-President Luis de Guindos in Frankfurt on Thursday.
The granting of new home loans needs to be closely scrutinized, particularly in particularly affected countries such as Ireland. However, the ECB sees no sign of a general overheating of the market.
The rise in real estate prices is, according to experts, a consequence of years of zero interest rates, which have made the investment in "concrete gold" much more attractive. In Germany, the Bundesbank has long warned against the bidding of residential property, especially in large cities.
From their point of view, the prices are about 15 to 30% higher than the justified level. In Germany, home loans account for more than half of loans to households and businesses.
The ECB report goes on to say that while the euro area economy was recovering, the banking sector as a whole had become more resilient. However, threats to the financial system have increased over the last six months.
Among the risks, euro watchers included US trade disputes and recent turmoil in emerging markets. In addition, uncertainties on the stock markets would be generated by the controversial budgets of the Italian government.
In difficult waters, the financial system could also be advised by an unregulated exit from Britain from the EU. Similar risks had already listed the US Federal Reserve on Wednesday.
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