Global Housing Watch

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Housing in Sweden

From IMF’s latest report on Sweden:

The Swedish housing market has deep structural problems. Large house price increases were necessary to overcome the hurdle of high construction costs before construction began rising. These costs reflect a combination of complex building regulations and limited competition in the sector owing to cumbersome municipal land sale and planning and approval procedures. The resulting supply shortfalls are present in 255 out of 290 municipalities, but are mostly in the three major metropolitan areas (Stockholm, Gothenburg, and Malmo) owing to ongoing urbanization. Moreover, strict rent controls have resulted in a declining supply of rental apartments as they are converted into tenant-owned condominiums and as existing renters are “locked-in”. The resulting long waiting times for rental apartments leave many households with no option but to purchase housing, which is incentivized by the tax deductibility of mortgage interest payments.”

 

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Low housing affordability undermines financial stability, growth, and equality. Home costs relative to median household income have more than doubled since the mid-1990s (…). In Stockholm, the price-to-income ratio is nearly twice the national average and is among the highest worldwide. These factors reduce labor mobility, especially for those from outside the main centers, hindering inclusive growth. Equity is further undermined by overcrowding among low-income groups and the need to rely on parental savings for housing purchases. Households must borrow more at higher house prices, lifting household debt to 182 percent of disposable income (…), with new purchasers taking on debts averaging 402 percent of their disposable income.”

 

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Policies to bolster construction are welcome yet are unlikely to be sufficient to rebalance the housing market. The government targets building 250,000 dwellings during 2015– 20, including by subsidizing (0.1 percent of GDP) construction of affordable rental housing—which meets energy efficiency and rent limit requirements—and through state financing to municipalities for infrastructure related to housing development. Although construction has risen (…), housing starts only modestly exceed estimated household formation in most of the country, indicating that shortages will persist. Moreover, due to high land prices and construction costs, new development has been focused on the high-end of the market or located in more remote areas.”

 

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“Improving housing affordability should be a central priority, supported by deep structural reforms to promote more efficient use of existing property:

  • Sustaining housing supply. High construction costs in Sweden need to be addressed by streamlining building regulations and promoting competition in the sector, including by harmonizing fragmented planning and approval processes. Improving public transportation within regions would help relieve demand pressures in major centers. Budgetary support for construction of rental housing that meets affordability tests should be expanded.
  • Phasing out rent control. Providing incentives to better match housing to household needs will effectively increase supply in areas with high demand. All new construction of rental apartments should be fully exempt from controls. Rents on apartments under control should be steadily aligned with market rates, with low-income households protected by the housing allowance.
  • Addressing tax incentives. To promote efficient use of space, the composition of property taxes should be shifted by cutting capital gains taxes that deter sales while raising the recurrent property tax, which in 2008 was capped at a level among the lowest in OECD. If the property tax cannot be raised, it becomes more critical to reduce mortgage interest deductibility to ease demand and discourage high leverage. The macroeconomic impact would be modest while interest rates are low and such reforms could be part of a package that benefits households.”

“Authorities’ Views. The authorities recognize the structural challenges in the Swedish housing market, as reflected in the appointment of committees to review the planning and building regulations as well as the model for setting rents on newly produced rental housing. The authorities also recognize the need for further measures to reduce incentives for over-indebtedness. Political opposition to property tax is strong as it is considered to be unfair, and while a lower capital gains tax could improve property turnover, it could have distributional effects favoring older households that had often accumulated significant wealth. The government’s view is that a reduction in mortgage interest deductibility is more feasible if broad political consensus can be reached. With rents on newly-produced rental properties being very high, the government is concerned that a transition to market-based rents would bring high rents, and it also has doubts that the supply of rental housing within the reach of lower income households would increase significantly. The Riksbank, on the other hand, stresses that a more market-based rent system would increase supply, benefitting young people.”

From IMF’s latest report on Sweden:

“The Swedish housing market has deep structural problems. Large house price increases were necessary to overcome the hurdle of high construction costs before construction began rising. These costs reflect a combination of complex building regulations and limited competition in the sector owing to cumbersome municipal land sale and planning and approval procedures. The resulting supply shortfalls are present in 255 out of 290 municipalities, but are mostly in the three major metropolitan areas (Stockholm,

Read the full article…

Posted by at 1:29 PM

Labels: Housing

Housing View – November 17, 2017

On cross-country:

  • 8th Global Housing Finance Conference (May 30-June 01, 2018) – World Bank
  • How Cities Are Tightening the Leash on Airbnb – Citylab
  • Housing policy and marriage: evidence from Egypt, Jordan and Tunisia – Economic Research Forum

 

On the US:

 

On other countries:

  • [Australia] A rare dose of honesty in the housing affordability debate – MacroBusiness
  • [Canada] Immigration, Capital Flows, and Housing Prices – British Columbia
  • [Canada] Vancouver Limits Airbnb, in an Effort to Combat Its Housing Crisis – New York Times
  • [Germany] Ticking time-bomb lies under Berlin’s property market – Financial Times
  • [Germany] Spreading housing shortage hits over 850,000 people in Germany – Reuters
  • [India] Home Price Rises Slow in India Thanks to Modi’s Cash Ban – Bloomberg
  • [Ireland] Irish house prices: Déjà vu all over again? – Economic & Social Research Institute
  • [Netherlands] Amsterdam returns Dutch house prices to 2008 highs – Financial Times
  • [Sweden] UPDATE 3-Sweden’s FSA proposes tighter mortgage rules as housing market slows – Reuters
  • [Sweden] Sweden’s big banks call an end to decades-long housing boom – Financial Times
  • [Sweden] The Shock of Sweden’s Housing Market is Hitting the Country’s Currency – Bloomberg
  • [United Kingdom] However you analyse it, housing in Britain is a mess – Financial Times
  • [United Kingdom] Solving UK housing crisis requires more than new homes – Financial Times

 

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Photo by Aliis Sinisalu

On cross-country:

  • 8th Global Housing Finance Conference (May 30-June 01, 2018) – World Bank
  • How Cities Are Tightening the Leash on Airbnb – Citylab
  • Housing policy and marriage: evidence from Egypt, Jordan and Tunisia – Economic Research Forum

 

On the US:

Read the full article…

Posted by at 5:00 AM

Labels: Housing

Housing View – November 10, 2017

On cross-country:

  • Why I won’t buy a house in any major city – and neither should you – World Economic Forum
  • Migration and Its Impact on Cities – World Economic Forum
  • Why there? Developers’ rationale for building social housing in the urban periphery in Latin America – Cities
  • Prime Global Cities Index – Q3 2017 – Knight Frank
  • Homes and Mortgages 2017 – Housing Costs and Prices – ING
  • Public expenditure on housing: the shift from capital spend to housing allowances. A European trend? – National Housing Federation
  • Demographic structure and housing prices: East Asia and Europe – Ideas
  • Bloomberg Global City Housing Affordability Index – Bloomberg

 

On the US:

 

On other countries:

  • [Bulgaria] A Roof Over Our Heads: Ensuring Adequate Housing for All Bulgarians – World Bank
  • [Finland] Why housing policy in Finland is a success story – Housing Europe
  • [India] Time to rethink public housing? – The Hindu
  • [New Zealand] New Zealand to ban foreign home buyers – Global Property Guide
  • [Norway] Housing Crash Dodged in Norway, But Intervention Door Stays Open – Bloomberg
  • [United Kingdom] London’s bubbly housing market goes flat – Economist
  • [United Kingdom] FT Money Show: Property prices, self build and pension transfers – Financial Times
  • [United Kingdom] How to solve the UK housing crisis – Financial Times
  • [United Kingdom] Housing Market Discount Rates: Evidence from Property Taxes – London School of Economics

 

aliis-sinisalu-70432

Photo by Aliis Sinisalu

On cross-country:

  • Why I won’t buy a house in any major city – and neither should you – World Economic Forum
  • Migration and Its Impact on Cities – World Economic Forum
  • Why there? Developers’ rationale for building social housing in the urban periphery in Latin America – Cities
  • Prime Global Cities Index – Q3 2017 – Knight Frank
  • Homes and Mortgages 2017 –

Read the full article…

Posted by at 5:00 AM

Labels: Housing

Housing View – November 3, 2017

On cross-country:

 

On the US:

 

On other countries:

  • [Australia] Australia’s Housing Boom Is ‘Officially Over,’ UBS Says – Bloomberg
  • [Australia] Quarterly Housing & Economic Review – October 2017 Release – CoreLogic
  • [Australia] As Dwelling Construction Surges Housing Turnover Falls – CoreLogic
  • [Canada] Foreign buyers inch back into Vancouver housing market – Reuters
  • [China] The Conventional View of China’s Problems May Be All Wrong: Q&A – Bloomberg
  • [Ireland] Revised mortgage measures – a six-month snapshot – Central Bank of Ireland
  • [New Zealand] New Zealand’s Foreign Home Ownership Ban Won’t Cause Price Collapse-Trade Min – New York Times, Quartz
  • [United Kingdom] Home values and firm behaviour – Bank of England
  • [United Kingdom] Inside London’s Huge Experiment in Predicting the Housing Future – Bloomberg
  • [United Arab Emirates] Dubai: Service Me This – REIDIN

 

aliis-sinisalu-70432

Photo by Aliis Sinisalu

On cross-country:

 

Read the full article…

Posted by at 5:00 AM

Labels: Housing

Housing View – October 27, 2017

On cross-country:

On the US:

On other countries:

  • [Canada] Latest housing market snapshot and forecasts – CMHC
  • [China] China to tweak property price methodology to address “new challenges” – Reuters
  • [South Korea] South Korea to tighten mortgage rules for owners of multiple homes –Reuters
  • [Sweden] Swedish housing market ‘dampened’ but not in peril, says Swedbank – Financial Times
  • [Sweden] Where next for house prices in Sweden and hence monetary policy? – Notayesmanseconomics’s Blog
  • [United Kingdom] Residential mobility in London: Unlocking migration patterns– Cluttons
  • [United Arab Emirates] Dubai / Abu Dhabi Residential Property Price Indices: September 2017 Results – REIDIN

 

aliis-sinisalu-70432

Photo by Aliis Sinisalu

On cross-country:

On the US:

Read the full article…

Posted by at 5:00 AM

Labels: Housing

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