According to EU risk watchers, there are signs of overvaluation of real estate in many European countries. Already in the past, the panel denounced this development.
The European Systemic Risk Board (ESRB) urged relevant governments to prevent potential threats. Germany, France, the Czech Republic and the non-EU countries Iceland and Norway were explicitly warned.
The ESRB also sees risks in Belgium, Denmark, Luxembourg, the Netherlands, Finland and Sweden. The problems ranged from too high levels of household debt, over-lax mortgages, to overheating in the market due to ever higher prices.
One of the driving forces behind the flight into so-called concrete gold is the low interest rate policy of the European Central Bank. For some time now, the Bundesbank has warned against excessive exaggerations in real estate prices in German cities - especially in the seven metropolises of Berlin, Dusseldorf, Hamburg, Frankfurt, Cologne, Munich and Stuttgart.
The ESRB was established in 2010 in response to the financial crisis. As an early warning system, it should point out dangers to the stability of the financial system in the EU.
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