![]() Section 2 focuses on the diverse impacts on the euro area housing market of the first wave of the COVID-19 pandemic from the first to the third quarter of 2020, when strict containment measures had the greatest effect on activity. Throughout, the article takes a holistic approach that covers developments in and prospects for euro area housing investment, house prices and loans for house purchase. This article explores the developments in the euro area housing market during the pandemic and compares them with those in previous crises, paying particular attention to the role of policy support measures. The particular nature of the COVID-19 pandemic triggered vigorous monetary, fiscal and macroprudential policy responses. These restrictions induced peculiar features compared with the global financial crisis and the sovereign debt crisis, notably as a result of their diverse impact on real and nominal housing dynamics and differing housing developments across countries. Initially, the shock caused by the COVID-19 pandemic was unrelated to economic fundamentals and – especially in its early phases – afflicted the economy mainly through mandatory and voluntary restrictions on mobility aimed at containing the spread of the virus. The global financial crisis of 2008 originated in the US housing market and the sovereign debt crisis that started in 2010 stemmed primarily from financial shocks. However, the reaction of the euro area housing market to the COVID-19 crisis differed from that in previous crises owing to the different nature of the underlying shock. ![]() ![]() Note: Grey areas delimit recessions, as identified by the Centre for Economic Policy Research (CEPR) Euro Area Business Cycle Dating Committee. House prices, housing investment and housing loans in the euro area
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