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Kathinka Schlieker
- 17 March 2025
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 2, 2025Details
- Abstract
- This article reviews developments in the euro area housing market during the recent house price cycle and compares them with previous cycles. The recent downturn in house prices was relatively mild and short-lived, as well as less pervasive, compared with the global financial crisis and the sovereign debt crisis and implied smaller adjustments to overvaluations. This limited decline in house prices effectively unwound the exceptional pandemic-related surge in housing demand and, therefore, did not bear the same hallmarks as an outright recession. This is because income remained solid owing to the favourable labour market conditions and excess savings had also accumulated during the pandemic. The role of tighter financing conditions in the adjustment of house prices was mitigated by relatively sound balance sheet positions, reflecting the macroprudential measures undertaken in the aftermath of the global financial crisis, a stronger prevalence of fixed rate mortgages and links between the housing and the rental market. With the combination of prevailing supply-side shortages and continuing sound demand fundamentals, house price developments may well continue on their upward path but still remain uncertain.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
R31 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→Housing Supply and Markets
- 25 September 2024
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 6, 2024Details
- Abstract
- Wage indicators give policymakers a key perspective on the outlook for inflation through the effect of wages on the price-setting of firms and on the consumption behaviour of households. This box studies recent developments in wage indicators, with a particular focus on wage drift, which has recently been in decline. The moderation of wage drift is key to explaining the easing of growth in compensation per employee. This is due to negotiated wage growth taking over the role of achieving inflation compensation from wage drift. The recovery of average hours worked after the pandemic had also been pushing the wage drift up, but this impact has weakened recently.
- JEL Code
- E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
J30 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→General
J52 : Labor and Demographic Economics→Labor?Management Relations, Trade Unions, and Collective Bargaining→Dispute Resolution: Strikes, Arbitration, and Mediation, Collective Bargaining