Regulatory Alerts2021-12-02
Added · Updated
Warning of the European Systemic Risk Board on medium-term vulnerabilities in the residential real estate sector of Liechtenstein
The European Systemic Risk Board identifies medium-term vulnerabilities in Liechtenstein's residential real estate sector as a source of systemic risk, primarily driven by high and increasing household indebtedness equivalent to 226% of disposable income. The Board considers the existing macroprudential policy mix partially sufficient but recommends complementing the 80% loan-to-value limit with income-related borrower-based measures to prevent further risk accumulation. It advises that Liechtenstein authorities create a legal basis for such borrower-based instruments to address these vulnerabilities effectively.