The Unassuming Economist

On the US:

• Oregon’s new rent control law is only a band-aid on the state’s housing woes – Brookings
• Trickle-down housing economics – Northwestern University
• Slicing New York’s Housing Pie – New York Times
• Lens, Manville Shape Discussion of How Housing Can Be Coupled to Transit – Citylab
• Protect First Time Buyers and Taxpayers. Let the “Patch” Expire – American Enterprise Institute
• Boston Wants to Flip More Market-Rate Apartments into Affordable Housing – Next City
• Real Time Economics: More Americans Are Buying a Home Again – Wall Street Journal
• Climate change is hurting coastal real estate values. Oh, we’re losing ocean fish, too –Los Angeles Times
• Ask the Economist with Skylar Olsen – DSNews
• The Affordable Housing Crisis Across The U.S.: ‘Where We Call Home,’ Part 1 – wbur
• Oregon, the Rent Control State – Wall Street Journal
• Housing Affordability for Renters Index: Local Perspective and Migration – Urban Institute
• Three differences between black and white homeownership that add to the housing wealth gap – Urban Institute
• Housing Finance At A Glance: A Monthly Chartbook, February 2019 – Urban Institute
• How student debt may foster homeownership – University of Chicago
• Cheaper Housing Options Boost Homeownership in Some U.S. Metros – Bloomberg
• Redfin: These housing markets give low-income families a better shot at the American Dream – HousingWire

On other countries:

• [Australia] The Housing Market and the Economy – Reserve Bank of Australia
• [Australia] Australian House Prices Provide Food for Doves and Hawks – Bloomberg
• [Australia] Here Are the Winners From Australia’s Property-Market Downturn – Bloomberg
• [China] Chinese Banks Will Rise or Fall With the Property Market – Wall Street Journal
• [Luxembourg] No end in sight for upward housing market spiral in Luxembourg – Financial Times
• [Netherlands] As Amsterdam Overheats, Investors See Rent Cap Scaring off Money – Bloomberg
• [Portugal] Portugal’s housing market is strengthening – Global Property Guide
• [Thailand] Thailand’s modest house price rises – Global Property Guide
• [United Kingdom] Some of Britain’s wealthiest areas hit by house price drops of up to 25 percent – Global Property Guide

From the IMF’s latest report on Malta:

“Rapidly rising house prices and rents may eventually pose financial stability risks while putting some vulnerable households at risk of poverty. Policies that help mitigate the rapid increase of house prices and make rents more affordable while strengthening households and banks’ balance sheets should be encouraged.

Strong demand for housing has continued to push up property prices. While some signs of overvaluation have started to emerge, recent house price trends can largely be explained by fundamentals such as e.g., strong immigration flows, rising disposable income, portfolio rebalancing towards property investment and a delayed supply response. Other factors such as the extension of the first-time home-buyer stamp duty relief, the reduced tax rate on rental income, surging demand for tourist accommodation and, for the high-end segment, the IIP may also have played a role (but are not directly controlled for in the empirical analysis conducted in Annex I).

Banks’ exposure to housing-market-related risks is high and increasing, and the introduction of macroprudential measures should proceed as planned. All the more so that households’ indebtedness is relatively high, low income households are vulnerable to housing price corrections and flexible interest rate on mortgages are prevalent.7 Against this backdrop, recent efforts to close data gaps (loan-level data collection) and the planned introduction of borrowerbased macroprudential measures such as caps to loan-to-value (LTV) ratios at origin, stressed debt service-to-income (DSTI) limits, and amortization requirements are steps in the right direction (see text table).

To be more effective, the new borrower-based measures could be refined in due course and exemptions to the LTV limit could be narrowed. To avoid excessive risk concentration, speed limits should be defined in terms of the total value of new loans, not in terms of the number of new loans, and speed limits for loans against secondary and buy-to-let properties, the likely most speculative segment, should be lowered as soon as concerns about any initial disruptions dissipate. Finally, the scope of the new borrower-based measures should be extended to also cover non-bank mortgage loans.

Rapidly rising housing costs are affecting vulnerable households. The government recently relaxed the eligibility requirements for rent subsidies, but the scheme should be periodically reviewed to ensure it remains targeted on low-income households. Further efforts should also be envisaged to accelerate the provision of social housing, including by fiscally incentivizing private investments.

Authorities’ Views

Rapidly rising property prices are viewed by the authorities as mainly reflecting economic fundamentals. Inflows of foreign labor and higher income in general are fueling housing demand. The authorities also see the impact of tax benefits for first and second-time home buyers, the reduced tax rate on rental income and the IIP as marginal. They stressed that the planned borrower-based macroprudential measures were carefully calibrated to have minimal market impact upon their introduction. The authorities have agreed that there is room for refinement, in due course, and emphasized that they can easily recalibrate the measures to mitigate financial stability risks emanating from the housing market in a timely and effective manner. The authorities also recognize the growing importance of making housing more affordable for vulnerable households. They emphasized the progressive nature of the new rent subsidy scheme. Projects are underway to increase the stock of social and affordable housing.”

On cross-country:

• Social rental intermediation. How private landlords can contribute to solve the housing crisis? – Housing Europe
• What are some of the primary driving forces behind the Urban Housing Crunch? – Forbes
• What if the future of housing means accepting that a home isn’t permanent? – Quartz
• Macroprudential approaches to non-performing loans – ESRB

On the US:

• How Monetary Policy Shaped the Housing Boom – New York University
• Inside the Rise and Fall of a Multimillion-Dollar Airbnb Scheme – New York Times
• Rents Are Up? That Depends on Where You Live – New York Times
• California housing crisis podcast: Will a boom in building make housing more affordable? – Los Angeles Times
• UCLA Ziman Program – a First Nationwide – Teaches Affordable Housing Development – UCLA
• U.S. housing outlook stuck in a lull as economy dulls: Reuters poll – Reuters
• Home Prices in 20 U.S. Cities Rise by Least in Four Years – Bloomberg
• Real House Prices and Price-to-Rent Ratio in December – Calculated Risk
• Trouble In The Housing Market – Forbes
• Slowing Home Price Growth and Construction Hit Housing Market – Wall Street Journal
• Is Housing in Your City Getting Unaffordable? Here’s How You Can Help – Citylab
• Can housing reform survive a hall of mirrors? – Boston Globe
• Seattle-area home price cooldown not reaching cheaper parts of housing market – Seattle Times
• California’s housing supply law fails to spur enough construction, study says – Los Angeles Times

On other countries:

• [Australia] Australian Home Lending Now Weakest Since the Mid-1980s – Bloomberg
• [Australia] House price falls in Sydney and Melbourne not all bad, Reserve Bank head says – The Guardian
• [Australia] Australia’s housing data still terrible across the board – Variant Perception
• [Canada] Affordable housing becomes singular focus of Toronto’s new real estate czar – Globe and Mail
• [Canada] Bank of Canada says housing crunch threatens Canadian economy – Fraser Institute
• [Canada] Canada’s housing market set for years of subdued price rises: Reuters poll – Reuters
• [Canada] Another budget, another missed opportunity to tackle B.C.’s housing shortage – Fraser Institute
• [China] Capital Gains Tax would see house prices fall as investors flee market ahead of tax’s implementation – REINZ – New Zealand Herald
• [China] China’s Huge Number of Vacant Apartments Are Causing a Problem – Citylab
• [Denmark] Danish Study Quantifies Impact of House Prices on Consumption – Bloomberg
• [Hong Kong] Why Hong Kong Is Claiming Golf Greens for New Housing – Citylab
• [India] India Cuts Tax on Housing to Boost Real Estate Before Elections – Bloomberg
• [Ireland] Ireland’s house price rises continue, albeit at a much slower pace – Global Property Guide
• [Israel] Changes in the share of first home buyers among young people, based on income level – Bank of Israel
• [Netherlands] House prices expected to keep rising this year, homeownership unattainable for more and more people – Rabobank
• [New Zealand] New Zealand Locks the Doors From the Inside – New York Times
• [New Zealand] Sale of portable cabins booms in New Zealand amid housing crisis – The Guardian
• [Sweden] Refugees and apartment prices: A case study to investigate the attitudes of home buyers – Regional Science and Urban Economics
• [United Kingdom] No-deal Brexit would take a chip off UK home values – Reuters poll – Reuters
• [United Kingdom] Housing costs: Five surprises explained – BBC
• [United Kingdom] A solution to the housing crisis? – Financial Times

From a paper by Charles Ka Yui Leung and Joe Cho Yiu Ng:

“This paper aims to achieve two objectives. First, we demonstrate that with respect to business cycle frequency (Burns and Mitchell, 1946), there was a general decrease in the association between macroeconomic variables (MV) and housing market variables (HMV) following the global financial crisis (GFC). However, there are macro-finance variables that exhibited a strong association with the HMV following the GFC. For the medium-term business cycle frequency (Comin and Gertler, 2006), we find that while some correlations exhibit the same change as the business cycle counterparts, others do not. These “new stylized facts” suggest that a reconsideration and refinement of existing “macro-housing” theories would be appropriate. We also provide a review of the recent literature, which may enhance our understanding of the evolving macro-housing-finance linkage.”

From the IMF’s latest report on Australia:

“The housing market correction is helping housing affordability. Foreign and domestic investor demand has moderated, thereby enhancing opportunities for first-time home buyers and purchases by owner-occupiers more broadly. On the supply side, progress has been made in using City Deals, agreements across all levels of government that integrate planning and infrastructure delivery for new developments and redevelopments. A prominent example―the City Deal for western Sydney―encompasses the development of the urban area around the new airport. Two states (Western Australia and Tasmania) introduced or announced housing-related tax policy measures discriminating between residents and non-residents since the last Article IV Consultation.

Housing supply reforms will remain critical to restoring housing affordability. While the housing market correction will help, it is unlikely to be sufficient for inclusive, broad-based affordability and growth. The underlying demand for housing is widely expected to remain strong with a robust economic growth outlook for and high population growth in urban areas. At the same time, broad affordability will also be a precondition for a significant reduction in related macro-financial vulnerabilities. As planning, zoning, and other reforms affect supply and prices with long lags, housing supply reforms should, therefore, not be delayed because of the housing market correction. City Deals are a useful catalyst for the large-scale development or redevelopment of urban areas. Nevertheless, this instrument has limited reach, although the Regional Deals envisaged by the government would provide for a welcome extension. Some states should still take the opportunity for further streamlining and consolidation in planning and zoning regulation.

Broader tax reforms that also address housing and land use would reinforce the impact of supply-side measures. Stamp duties should be replaced by broader land taxes, which would strengthen incentives for efficient land use. Within the context of a broader tax reform, gradual lowering of capital gains discounts and limits on negative gearing for investors would reduce structural incentives for leveraged investment by households, including in residential real estate. A more limited capital gains tax exemption for owner-occupiers should also be considered.

The housing policy measures discriminating nonresident buyers should be reconsidered. As the role of foreign buyers in residential real estate markets has started to decline, the discriminatory measures should be reconsidered, as they may no longer be needed to address housing market imbalances. They should be replaced by alternative and effective non-discriminatory measures where possible (e.g., a general surcharge on all vacant property).

The state governments of New South Wales and Victoria noted that the fall in housing prices in Sydney and Melbourne was larger than originally projected in their budgets. Nevertheless, despite their limited progress on zoning and planning reform to reduce impediments to housing supply and affordability, they expected house prices to find support from both housing demand and supply factors. The authorities highlighted that City Deals could be important tools to foster urban housing supply. City Deals have allowed all levels of government to coordinate planning and construction decisions, thereby facilitating infrastructure provision which can in turn support housing supply expansion. Deals agreed on or announced in 2018 included Darwin, Geelong, Hobart, and Perth. There are also plans underway to pilot Regional Deals outside of the major urban areas.”