Regulatory Alerts2016-09-22
Added · Updated
Warning of the European Systemic Risk Board on medium-term vulnerabilities in the residential real estate sector of Luxembourg
The European Systemic Risk Board identifies medium-term vulnerabilities in Luxembourg's residential real estate sector as a source of systemic risk to financial stability, driven by high property prices and increasing household indebtedness. The warning highlights that the combination of elevated real estate prices and rising household debt exposes the real economy to financial stability risks, particularly in the event of an economic shock. It notes that while microprudential measures have been implemented, no macroprudential measures have been adopted to address the negative interaction between household indebtedness and residential real estate price dynamics.
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