Home prices in Europe, which are overvalued in many places, could see major price corrections as the region confronts elevated inflation and tight financial conditions, the International Monetary Fund (IMF) said in a recent report.
Europe is facing multiple economic challenges, with inflation remaining high and financial sector risks materializing. At the same time, real estate markets are showing “growing signs of overvaluation” across the region, according to the April 28 report. In countries such as Hungary, Luxembourg, the Netherlands, Portugal, Iceland, and the Czech Republic, real house prices have doubled since 2015. The IMF is expecting real estate markets in Europe to see “disorderly corrections” even if the region were to avoid a “broader financial distress.”…