Sir, – The letter on the ECB and housing policy (December 27th) seems to overlook the significant role of the ECB and other EU institutions in relation to housing. Since 2014, through the Single Supervisory Mechanism, the ECB exercises direct prudential supervision of all the significant euro zone banks and mortgage lenders – whose assets often depend on maintaining house prices.
It is also important to point out that, following consultation with EU citizens in 2020, the ECB is now taking steps to better reflect housing costs in the measurement of inflation. Unlike the current calculations, it is clear that housing amounts to more than 6 per cent of household costs, while annual housing inflation is more than 2 per cent in many member states.
To maintain price stability the ECB sets interest rates for the euro area, resulting in historically low mortgage interest rates – a significant factor in house purchase prices. The impact of quantitative easing on EU property and housing prices has been well documented. The instability arising from young people’s frustration in accessing secure and affordable housing in Europe’s cities is a concern for all EU advocates.
Indeed, many are questioning blind faith in economic orthodoxies, with their “unintended consequences” causing social and economic hardship. In fact, through wide participation with EU citizens, we can avoid these financial and housing disasters.
Capable women, like Christine Lagarde at the ECB, are leading this debate.
It is not at all ludicrous for the ECB to be concerned about housing, given its impact on the housing situation of EU citizens. – Yours, etc,
Prof PADRAIC KENNA,
School of Law,
College of Business,
Public Policy and Law,
National University
of Ireland, Galway.