Housing investment in the euro area is expected to be weighed down by tighter monetary policy despite recent resilience, according to European Central Bank research.
(Bloomberg) — Housing investment in the euro area is expected to be weighed down by tighter monetary policy despite recent resilience, according to European Central Bank research.
While the impact of higher borrowing costs has been less pronounced than in the US, “the negative effects of the increase in monetary policy interest rates in the euro area are likely to intensify over time, given the estimated lagged effects of monetary policy,” ECB researchers Niccolo Battistini, Simona Delle Chiaie and Johannes Gareis said.
Housing investment in the currency bloc has been more sheltered from recent central-bank tightening because its mortgage markets are less deep than those in the US, they said in a pre-release of the ECB’s Economic Bulletin.
Still, in its latest set of quarterly economic forecasts, the ECB said it’s “projected to decline substantially further in the short term and to remain weak over the projection horizon, as financing conditions tighten and real disposable income stagnates.”
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