The Consequences of Macroprudential Interventions in the German Property Market

In the wake of the global financial crisis, the regulatory paradigm has shifted towards a stricter macroprudential supervision. In contrast to microprudential supervision prevailing so far, the focus has now shifted to include not only the solvency of individual credit institutions but also the stability of the financial system as a whole. As a result, property markets are increasingly attracting the attention of the financial supervisors. Macroprudential policy is currently being implemented in the form of discretionary interventions anticipating unsustainable developments in the real estate and credit markets. However, to reduce the risk of policy mistakes, it is important to conduct macroprudential policy rule-based. Moreover, if financial imbalances and asset price bubbles are to be identified, reliable data will be required.