A leading authority within the European Central Bank has warned that the next financial crisis – whenever it hits – will be “associated to the real estate sector”.
Danièle Nouy, the leader of the ECB’s supervisory council, told journalists in Latvia this week that the bank is following developments within the sector closely, and this time round will be far better equipped to deal with any downturns.
“Many previous crises have been related to the property market, though not in a direct way”, she is reported as saying.
Here, Dinheiro Vivo comments this is “not the first time financial authorities have warned of the risks in this area.
“In June, the Bank of Portugal stressed that house price increases were putting financial stability at risk (click here).
“This followed an increase of more than 30% in prices since the middle of 2013, said the paper, stressing that the central bank sees the “arrival in force of foreign investors” as the driving force behind the boom.
Ratings agency Standard & Poors has since thrown its predictions into the ring, suggesting price increases will continue rising over the next few years, with only Ireland showing a hgher percentage leap (click here).
But as to the timing of the next financial crisis, there is very little to go on.
Nouy has simply intimated that ‘sooner or later’ it will be upon us.
