FDD - Are European Housing Markets Getting Too Hot?

• House price growth in the eurozone is at its highest since 2006 as housing markets were supported by a limited impact of the pandemic on household finances, rising savings, historically low-interest rates, favorable financing conditions, and changing preferences.
• The improved macroprudential framework in Europe, increased supply of housing, and bottoming out of interest rates are expected to ease the upward pressures on price growth.
• Relative vulnerabilities are highlighted by IHS Markit's housing market heat index. Luxembourg, Sweden, the Netherlands, Czechia, and Denmark are the most vulnerable according to this index because of excessive price and mortgage growth and high household debt.

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