This may include ads from us and third parties based on our understanding. The head of the ECB's banking supervision, Andrea Enria said there is an increase in vulnerabilities in some countries' residential real estate. The combination of COVID- 19 pandemic and an increase in distressed loans, have overheated the real estate market in many places, leading to an increased risk of a bubble A real estate bubble is a strong and persistent deviation of price level from fundamental data - like income, economic growth and population migration. A bubble is characterised by temporary periods of high demand, low supply and inflated prices, which creates instability in the housing market and economy as a whole. On Wednesday in the European Parliament Economic Committee, Mr Enria said that, while the number of non-performing loans is still manageable, the quality of the underlying assets appears to be deteriorating. He also says that the banks' forecasts for bad loans may be overly optimistic.
A real estate bubble is a strong and persistent deviation of the price level from fundamental data - like income, economic growth and population migration. A bubble is characterised by temporary periods of high demand, low supply and inflated prices that create instability in the housing market and economy as a whole. On Wednesday in the Economic Committee of the European Parliament, Mr Enria said that, while the number of non-performing loans is still manageable, the quality of the underlying assets appears to be deteriorating. He also said that banks' forecasts for poor loans may be too optimistic.
According to UBS, the reason for the increasing real estate prices can be attributed to the being of cheap loans. In recent years, the number of outstanding loans has also increased at an almost constant pace all around the world. A tightening of lending standards could therefore stop the price boom abruptly, the bank said. However, according to UBS the CoVID -19 pandemic had a large part to play in that.