The Unassuming Economist

IMF’s latest report on Lithuania says that: “Housing price developments in Lithuania are not an immediate concern, but the Bank of Lithuania rightly keeps an eye on possible overheating and froth in certain market segments. Macroprudential tools are in place to step in if needed. The strength of some small non-systemic financial institutions needs continued attention and credit union reform should be completed in line with current plans.”

From a new IMF paper on: Are House Prices Overvalued in Norway? – A Cross-Country Analysis:

 

 

“High and overvalued house prices are a source of vulnerability in Norway, in view of the importance of the housing market to both financial and macroeconomic stability. A large correction of house prices, driven by slower real income growth, a reverse in sentiment, or interest rate hikes could weaken household balance sheets and depress private demand, and in turn adversely affect corporate and bank earnings. The authorities have been vigilant about the risks and have implemented a list of measures to strengthen the resilience of banks and households, including additional bank capital buffer requirements in line with Basel III/CRD IV, higher risk weights on residential mortgages using IRB models, tighter mortgage regulations, and the introduction of the debt-to-income limit of five times the borrower’s gross annual income to complement the loan-to-value (LTV) limits and affordability tests. Nevertheless, further targeted macroprudential measures should be considered to help contain systemic risks if vulnerabilities in the housing sector intensify, including: tighter LTV limits, a reduction in banks’ scope for deviating from mortgage regulations, and/or higher mortgage risk weights.

In the longer term, the macro-financial resilience of the economy to housing market shocks should be enhanced through tax reform and structural measures. A stable housing market (without pronounced boom-bust cycles) would contribute to smoother economic development. While macroprudential measures play an important role in containing the buildup of financial imbalances, a holistic approach is needed to fundamentally address the issue: (i) reducing the generous tax preferences for housing investment would help prevent demand distortions and excessive leverage, thereby dampening housing cycles; (ii) while the recent streamlining of building codes―which shortened the time needed to obtain a building permit and finish construction—is welcome, relaxing land-use and remaining constraints on new property construction, including at the municipal level, should facilitate a more efficient use of land and a flexible adjustment of housing supply, which will mitigate house price growth; and (iii) a more developed rental market would help relieve demand pressures—especially in view of the recent large influx of asylum seekers―as well as support labor mobility across regions as the economy goes through structural change.”

 

The latest update of the International Jobs Report shows that: “The global unemployment rate is expected to remain stable this year at about 5.7 percent and then decline in the coming years. The total number of people unemployed around the globe will remain at about 175 million this year. Unemployment rates are expected to decline in most advanced economies, but expected to be higher this year (compared to last year) in many emerging markets. Venezuela’s unemployment rate is expected to increase by 4 percentage points between 2016 and 2017, with smaller increases expected in Algeria, Brazil, South Africa and Turkey.”Continue reading here.

On cross-country:

• Prime Global Rental Index – Q1 2017 – Knight Frank
• EMF Quarterly Review – Q1 2017 – European Mortgage Federation
• Houses Across Time and Across Place – Centre for Economic Policy Research

On the US:

• How Exclusionary Zoning Comes at a Loss for Housing and Jobs – Foundation for Economic Education
• Moving to Opportunity: Why Breaking Family Ties Isn’t So Easy – Zillow
• Developing Inclusive Communities: Challenges and Opportunities for Mixed-Income Housing – Federal Reserve Bank of Atlanta
• Community Banks Account for Nearly Half of Residential Construction Loans – Eye on Housing
• Estimating the Total U.S. Demand for Rental Housing – National Multifamily Housing Council 
• Incomes, Migration and Housing Affordability – Oregon Office of Economic Analysis

On other countries:

• The role of foreign investors in the London residential market – London School of Economics
• [United Kingdom] Low-cost housing schemes have little impact on social mobility – London School of Economics
• German Housing Prices: Boom Time Over? – Handelsblatt Global
• [Canada] B.C. throne speech acknowledges importance of housing supply on affordability – Fraser Institute
• [United Kingdom] Grenfell: the anatomy of a housing disaster – Financial Times
• Irish House Price Report Q2 2017 – Daft.ie
• Moving to a New Housing Pattern? New Trends in Housing Supply and Demand in Times of Changing. The Portuguese Case – Critical Housing Analysis
• Some Thoughts on Massive Affordable Housing Schemes under the Pressure of Commodity Housing Inventory in China’s Cities – Hubei University