The Unassuming Economist

The IMF’s latest report on Namibia says that:

“Recently decelerating house prices and banks’ and households’ large exposure to mortgage loans raise concerns about risks from sudden corrections in the housing market. Staff estimate that, with the economy decelerating, house prices remain on average overvalued by about 10 percent, down from about 18 percent three years ago. FSAP sensitivity analysis suggests that all banks are resilient to a full correction in house price overvaluation. However, in the case of an over-correction (e.g., 20 percent price decline), some banks would be unable to comply with capital requirements. Under these scenarios, banks would deleverage with negative effects on credit and growth.”