The Real Estate Markets Need a Clear Signal from the ECB

The European Central Bank (ECB) has once again chosen not to announce any changes since the Governing Council’s previous meeting in June. The real estate markets in particular would have been grateful for a clear signal indicating when and how gradually the bank is planning to move back in the direction of higher interest rates. This affects not only the German real estate market, but other European markets as well, including Austria, the Netherlands and France. Professor Steffen Sebastian, professor of real estate financing at the International Real Estate Business School (IREBS) at the University of Regensburg and a research associate at the Centre for European Economic Research (ZEW), Mannheim, shares his view on the matter.

“The effects of the ECB’s expansive monetary policy of recent years have been felt most keenly on the real estate markets. The low interest rates have created extremely high inflation – not, as the ECB had hoped, on the consumer goods markets, but on the asset markets, and in particular on the real estate markets. This is precisely why the real estate markets need a clear signal from the ECB.

Even if the central bank is planning to successively reduce its net asset purchases, we are still a long way off from seeing a real reversal in monetary policy. Even if the bank puts an end to net asset purchases, its monetary policy is still incredibly expansionary. The ECB is still picking up speed and putting its foot on the gas – it’s just not speeding up at the same rate it was before.”

For further information please contact:

Prof. Dr. Steffen Sebastian, Phone +49 (0)941/943-5081 Steffen.Sebastian@irebs.de