The Unassuming Economist

From the IMF’s latest report on New Zealand:

“Despite the COVID-19 pandemic, housing prices have surged in New Zealand in 2020 and much of 2021, more so than in other countries, raising affordability concerns. This was driven by demand-side factors such as record low mortgage rates, easy credit availability, COVID-related pent-up demand, and lagged effect of population growth interacting with inelastic supply. The housing market is now turning given that many of these factors are reversing, in part due to recent policy actions, but the extent of moderation remains uncertain. Rising mortgage rates are set to further dent affordability and make borrowers vulnerable to mortgage repricing risks, but financial stability risks from the housing market would likely be manageable as banks are well capitalized. Policy should focus on increasing supply and ensuring affordability, including through the provision of public social housing. Macroprudential policy should be adjusted commensurate with the evolution of the housing cycle and financial stability risks, while the planned expansion of the macroprudential toolkit may prove useful for future use.”

On cross-country:

• Which housing markets are most exposed to the coming interest-rate storm? The pain of rising mortgage repayments will be harder to bear in some places than in others – The Economist
• Wages Can’t Keep Up With Spike in Housing Prices. Across the globe, the 10 cities that experienced the largest drops in affordability in 2021 were all in the U.S., new research shows – New York Times
• Grantham: “Day of reckoning” coming for global housing markets – Macro Business
• When were U.S. home prices at their worst? – Marginal Revolution

On the US:    

• US homebuyers stretch finances to beat rising rates in hot market. Shoppers settle for less space and take second jobs in response to declining affordability – FT
• How Hurricanes Sweep Up Housing Markets: Evidence from Florida – SSRN
• The Housing Market Is Passing an Inflection Point This Spring, on the Way to More Balanced Conditions – Zillow
• For Tens of Millions of Americans, the Good Times Are Right Now. Their houses are piggy banks, their retirement accounts are up and their bosses are eager to please. When the boom ends, everything will change. – New York Times
• Long Covid in Real Estate Weighs on Core Inflation. Shelter rents are still rising and will offset falls in prices elsewhere; any uptick in headline inflation is likely to trigger another bout of market volatility. – Bloomberg
• Building Materials Prices Move Higher, Up 19% Year-over-Year – NAHB
• Multifamily Rent Growth Slow to Decelerate – Yardi Matrix  
• Fed Policy Helped Distressed Homeowners But Wasn’t a Cure-All – UCLA
• Does Affordable Housing Lead to Electoral Backlash? – Princeton University
• Mortgages drive increase in US household debt to nearly $16tn. Credit card balances stand $71bn higher than a year ago but New York Fed says borrowers are in ‘very good shape’ – FT   

On China

• Chinese property developer Sunac defaults as lockdowns hit house sales. Beijing’s pandemic restrictions have worsened a liquidity crisis in real estate – FT

On other countries:  

• [Australia] Seven downsides to Australia’s dangerous property obsession. Home ownership creates unbalanced growth and deceptive prosperity while contributing to structural problems – The Guardian
• [Australia]  Is housing our greatest policy fail? – Financial Review
• [Australia] Australia’s Housing Market Faces Its Biggest Test in 30 Years. Property prices expected to fall, building slow on rate rises. Declining home values a challenge for winner of May 21 ballot – Bloomberg
• [Belgium] The impact of changes in dwelling characteristics and housing preferences on house price indices – Central Bank of Belgium
• [Canada] Trudeau to outlaw foreign home buyers in Canada as affordability fears heat up. Housing experts say it’s not the right fix: “This is kind of scapegoating.” – Politico
• [Canada] How Do Mortgage Rate Resets Affect Consumer Spending and Debt Repayment? Evidence from Canadian Consumers – Dallas Fed
• [New Zealand] New Zealand May Eliminate Housing Shortage Within Years: Westpac – Bloomberg
• [New Zealand] As property market cools, New Zealand’s recent home buyers tighten belts – Reuters
• [Singapore] Singapore’s Hot Housing Market. Despite government’s various efforts to restrain the price of housing, costs have risen considerably since the beginning of the COVID-19 pandemic – The Diplomat
• [Spain] Mallorca, where mountains tower and house prices climb. With the easing of Covid rules, wealthy overseas buyers are back on the Balearic island, pricing out locals – FT
• [Turkey] Cheap home loans raise Turkey’s inflation roof – Reuters
• [Turkey] Turkey’s Erdogan announces measures to address soaring housing prices – Reuters 
• [Turkey] Turkey’s new measures fall short of addressing surging house prices, builders say – Reuters
• [United Kingdom] UK house prices rise but cost of living crisis will cool market, says Halifax. April marks longest run of monthly increases since 2016 as average cost of home reaches record of £286,079 – The Guardian
• [United Kingdom] Bank of England Sees U.K. House Price Growth Slowing Down – Bloomberg
• [United Kingdom] U.K. Housing Market Outlook Dims With Jump in Borrowing Costs. Fixed-rate mortgages provide a short-term cushion for buyers. End of the era of cheap money will stretch affordability – Bloomberg
• [United Kingdom] Cash buyers drive sales and prices in UK housing boom. Interest rate rises and cost of living squeeze likely to strengthen the role of mortgage-free buyers – FT
• [United Kingdom] ‘The risks are pretty big’: how long can UK house prices defy gravity? Pent-up lockdown demand and stamp duty holidays kept prices high, but rising mortgage rates and living costs may tip balance – The Guardian
• [United Kingdom] How Hongkongers became the biggest foreign homeowners in London and where they are buying – including boroughs along the Thames such as Barking and Dagenham, Tower Hamlets and Greenwich – South China Morning Post
• [United Kingdom] London’s housing market is making us buyers do irrational things. Lack of supply leads house-hunters to write heart-rending sob stories and offer outrageous amounts above the asking price – FT

From the IMF’s latest report on Peru:

From a paper by Giulia Giupponi, Camille Landais, and Alice Lapeyre in the Journal of Economic Perspectives:

“What is the most efficient way to respond to recessions in the labor market? To this question, policymakers on the two sides of the pond gave diametrically opposed answers during the COVID-19 crisis. In the United States, the focus was on insuring workers by increasing the generosity of unemployment insurance. In Europe, instead, policies were concentrated on saving jobs, with the expansion of short-time work programs to subsidize labor hoarding. Who got it right? In this article, we show that far from being substitutes, unemployment insurance and short-time work exhibit strong complementarities. They provide insurance to different types of workers and against different types of shocks. Short-time work can be effective at reducing socially costly layoffs against large temporary shocks, but it is less effective against more persistent shocks that require reallocation across firms and sectors. We conclude that short-time work is an important addition to the labor market policy-toolkit during recessions, to be used alongside unemployment insurance.”

Source: World Bank Blogs

A recent blog by the World Bank discusses the pertinent issue of effectively measuring primarily female-run enterprises in developing and developed nations across the world. Through a compilation of resources such as the report, Women, Business and the Law, 2022 and endeavors in the We-Data project which collects data on women’s access to various business-related resources, the blog attempts to provide a broad picture of the status quo. It explores some regulatory barriers (e.g., laws prohibiting married women from being signatories to commercial contracts or accessing capital independently), operational hurdles, and data-related challenges that countries face while capturing this segment of businesses.

Read on to know more.

Watch: World Bank’s 9th South Asia Economic Policy Network conference on Social Norms and Gender Equality (May 11th and 12th, 2022)