The European Union is threatened by an unprecedented crisis in the real estate market
Information portal Bloomberg, citing the words of the head of the investment company Apollo Global Management Scardon Baker, said that the era of easy money is ending in Europe.
The European Central Bank, in order to fight inflation, has begun to sharply tighten the screws since 2022 and aggressively raise interest rates on loans.
The real estate market, which is currently experiencing a serious debt burden, will be most affected by the increase in interest rates. A multiple increase in interest rates on mortgage loans also reduces the demand for buying real estate by a multiple. Liuli in Europe are not ready to pay 2-3 times more for square measures than a year ago.
Investors, in anticipation of an imminent fall in prices, put up their properties for sale.
At the end of 2022, the European Systemic Risk Board issued a warning about a likely decline in real estate prices in the EU countries. The report states that the real estate market is in a high-risk area.
At the end of 2022, real estate prices in Sweden and the Baltic countries decreased by 20% compared to 2021.
Mostly investors who are not ready to bear the costs of maintaining housing due to rising tariffs for utilities are getting rid of housing.
The situation is unnerving banks, which are increasing mortgage rates to offset the risks associated with falling home prices.
According to the European Banking Supervision Service, the EU real estate market is currently invested in the form of bank loans worth 2 trillion euros, and only 20% of real estate objects have a loan maturity in 2023.
Experts fear that a systemic banking crisis similar to the one that brought down the US banking system in 2008 could happen in Europe. Only now Europe is in a much worse position and does not have the opportunity to “flood” the consequences of a future crisis with an amount of unsecured cash.
This will lead to unbridled growth of inflation, with which the European monetary authorities are now strenuously fighting.