Residential real estate (RRE) represents a major part of households’ wealth and constitutes a major source of collateral for lenders. Moreover, mortgages often make up large parts of banks’ balance sheets and are the largest and most common form of debt among households. Furthermore, housing construction is typically an important component of the real economy, as a source of employment, investment and growth. Experiences show that systemic risk relating to RRE – stemming from excessive risk-taking, high leverage, misaligned incentives and boom/bust tendencies, etc. – may lead to significant risks to domestic financial stability and serious negative consequences for the real economy, as well as potentially leading to negative spillovers to other countries. Vulnerabilities in RRE may manifest themselves through direct effects – through losses of capital or funding among lenders – and indirect effects in terms of foregone economic output, which may have second-round effects on the financial system. The underlying sources of such vulnerabilities differ. However, they often emerge from domestic structural features, from social and economic policies (e.g. tax deductibility of mortgage interest payments), cyclical developments, or combinations thereof. Taking a forward-looking approach and seeking to prevent the build-up of vulnerabilities is especially important. Analyzing vulnerabilities is also the task of the European Systemic Risk Board (ESRB), which is mandated to conduct macroprudential oversight of the financial system within the European Union (EU) in order to contribute to the prevention or mitigation of systemic risks.