No. 227 - The macroprudential measures adopted in Europe for the real estate sector

Risks are emerging in the real estate sector in Europe and the authorities have taken macroprudential measures to contain them. This paper reviews the main measures that have been or are being adopted in a number of European countries, and analyzes the main issues concerning the choice and the effectiveness of the different instruments. In the countries examined, the macroprudential instruments are just beginning to be phased and clear evidence of their effectiveness is not yet available. In some countries several measures have been introduced: given the uncertainty surrounding the functioning of these tools, the use of multiple instruments appears to offer greater potential, including in terms of the ability to reduce avoidance. The initial experiences show that macroprudential measures are more effective if they are put in place promptly when the indicators of risk in the real estate market and finance start to worsen. Calibration issues also appear to be crucial for their effectiveness.