France, Paris, the Avenue of the Grande Armee linking La Defense. Photo: AFP

Rising housing prices in European capitals, including Berlin, Paris, Vienna and Amsterdam threatens the stability of financial institutions, the European Central Bank warns.

“Exuberant house price developments in certain regions could, in principle, threaten the stability of financial institutions with mortgage exposures concentrated in those regions,” Bloomberg quoted the ECB as saying.

The ECB expressed concern that high levels of household debt, coupled with high exposure to real estate for banks in certain countries, including Finland and the Netherlands, has the potential to exacerbate shocks to the system.