European house prices may be on the verge of falling, risk watchdog says

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FRANKFURT (Reuters) – European house prices may be on the verge of declining as the economic environment deteriorates and the commercial real estate sector is also at risk, the European Systemic Risk Board, the EU’s financial risk watchdog, said on Thursday.

“The real estate cycle in several EU countries might be reaching a turning point,” the ESRB said in a statement.

“Transaction data and forward-looking household survey responses showing a decline in intentions to buy or build a house suggested that the probability of prices declining in the near future was rising.”

The ESRB added that a correction in the commercial real estate market could induce investor losses, increase credit risk for bank and non-bank lenders and prompt a decline in collateral values.

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(Reporting by Balazs Koranyi; Editing by Kirsten Donovan)