The Unassuming Economist

From the IMF’s latest Regional Economic Outlook report for Europe:

“This chapter documents the increasing use of macroprudential policies (MaPPs) in Europe in recent years to build financial resilience, contain general and sectoral credit growth, and limit house price increases. Considering these objectives and drawing from case studies, the chapter finds evidence that borrower-side measures, supported by lender-side measures, helped limit the share of riskier mortgages, thereby building resilience. Evidence is more mixed as to the ability of MaPPs to contain house price and overall credit growth against the backdrop of a still-accommodative monetary policy and other factors.

Macroprudential Measures in European Countries

The recent reacceleration in house prices has prompted the adoption of MaPPs in several European countries. Though credit and house price concerns are not yet generalized, house prices have increased substantially in several European countries over the past few years (…). In most of these countries, higher house prices have been accompanied by rising household debt (…) and rapid household credit growth (…).

To contain the buildup of systemic risks, especially in the residential housing market, many European countries have strengthened their MaPPs (…). While MaPPs have been
implemented across Europe, countries with larger postcrisis increases in house prices and household debt tended to adopt more MaPPs (…).

The main objectives of the recently introduced MaPPs, as stated by country authorities, were improving financial stability, building financial resilience, and containing general and sectoral credit growth. Within these broader objectives, policies were generally focused on protecting borrowers, strengthening banking systems, and slowing down house price increases (…). The latter was an objective in most economies, but particularly in the Czech Republic, Estonia, Norway, and Sweden.

In some countries (Estonia, Norway, Switzerland), the relaxation of lending standards was a major concern. Constraining the rise in the share of loans denominated in foreign currency was a prominent goal in Hungary. The various capital buffers adopted beginning in 2013, in line with the EU Capital Requirements Directive (CRD IV), were aimed at containing not only housing sector imbalances, but also credit cycle swings.”

Continue reading here.

The IMF’s latest report on Iceland says that:

“The real estate markets have cooled. The rate of growth of housing prices fell from a peak of 24 percent y/y in July 2017 to 6 percent 12 months later, while that for commercial real estate slowed from 19 percent y/y to 15 percent. A robust supply response was key, although slowing tourism growth also helped—including by limiting private rental demand via Airbnb (see for instance Eliasson and Ragnarsson, 2018). Residential investment and commercial construction continue to expand briskly.”

 

 

Also, see a separate report on Inflation Targeting in Iceland–The Issue of Housing Costs here.

 

From the IMF’s latest report on the United Kingdom:

“Mortgage lending growth has been moderate, owing in part to subdued demand, as well as macroprudential measures taken in recent years. Despite the recent moderation in residential house price growth (and outright declines in parts of London), house prices remain high relative to incomes (…). The ratio of new mortgage loans at relatively high loan-to-income (LTI) ratios has increased somewhat in the last two years, although the share of highly indebted households remains low. Since 2014, mortgage lenders have been required to test whether borrowers could still afford their mortgages in a stressed rates scenario.”

From the IMF’s latest report on Chile:

On cross-country:

• 2018 Housing Finance in Africa Yearbook – Centre for Affordable Housing Finance in Africa
• Pockets of risk in European Housing Markets: then and now – Central Bank of Ireland
• UN Special Rapporteur Leilani Farha on homelessness, human rights and why the lack of adequate housing is on the rise – Al Jazeera
• ULI/ PwC’s Emerging Trends in Real Estate Europe 2019 – Urban Land Institute

On the US:

• Birth Rates and Home Values: A Closer Look – Zillow
• Affordability, Disruption & Rising Interest Rates Lead Top Ten Issues Facing Real Estate – National Association of Realtors
• US Housing: As good as it gets? – ING
• When Millennials Battle Boomers Over Housing – Citylab
• Ballots for Buildings: Voters Weigh Affordable Housing Measures – The Pew Charitable Trusts
• Are median incomes actually stagnating? How we calculate housing costs affects the answer – Urban Institute
• Amazon’s real estate team did its homework – Brookings
• How Minimum Zoning Mandates Can Improve Housing Markets and Expand Opportunity – The Aspen Institute
• Resilience and housing markets: Who is it really for? – Land Use Policy

On other countries:

• [Australia] Australia’s Property Slump Casts Doubt on Household Spending – Bloomberg
• [Australia] Significant drop in auction rates set alarm bells ringing for major Australian housing markets – Global Property Guide
• [Canada] Vancouver’s complicated relationship with Chinese money – CBC
• [China] Three New Signs China’s Housing Market Slowdown Is Taking Hold – Bloomberg
• [Denmark] Party is over for apartment owners – but the Danish housing market is picking up – Danske Bank
• [Hungary] Measuring Heterogeneity of House Price Developments in Hungary, 1990–2016 – Central Bank of Hungary

Photo by Aliis Sinisalu