According to a recent report by the International Monetary Fund (IMF), the overvalued real estate markets in Europe could experience significant price corrections due to elevated inflation and tight financial conditions in the region. The report noted that several nations including Hungary, Luxembourg, the Netherlands, Portugal, Iceland, and the Czech Republic have seen real house prices double since 2015, and the IMF expects real estate markets to witness “disorderly corrections” even if there is no broader financial distress. The IMF estimates that 15-20% of home prices in most European countries are overvalued, and home prices in the Eurozone region are expected to fall over the next two years, with the Netherlands and Germany projected to see the biggest drops. The IMF also warns that rising living costs and mortgage rates could stretch European household balance sheets, leading to adverse macro-financial feedback loops among bank balance sheets, housing prices, and the real economy.