The Unassuming Economist

From a new IMF working paper by Mitsuru Katagiri:

“This paper investigates the developments in house price synchronization across countries by a dynamic factor model using a country- and city-level dataset, and examines what drives the synchronization. The empirical results indicate that: (i) the degree of synchronization has been rising since the 1970s, and (ii) a large heterogeneity in the degree of synchronization exists across countries and cities. A panel and cross-sectional regression analysis show that the heterogeneity of synchronization is partly accounted for by the progress in financial and trade openness. Also, the city-level analysis implies that the international synchronization is mainly driven by the city-level connectivity between large and international cities.”

The latest IMF report on Philippines points out that:

On the US:

• Perception of House Price Risk and Homeownership – NBER
• Affordable Housing: Hard Way and Easy Way – Cato Institute
• Barriers to Accessing Homeownership Down Payment, Credit, and Affordability – 2018 – Urban Institute
• Texas Property Taxes Soar as Homeowners Confront Rising Values – Federal Reserve Bank of Dallas
• The housing bubble, the credit crunch, and the Great Recession: A reply to Paul Krugman – Brookings
• America Needs to Revive the American Dream of Homeownership – Bloomberg
• How Much Will Homeowners Spend to Rebuild & Repair After Hurricane Florence? – Harvard Joint Center for Housing Studies
• Affordable housing is just the beginning of YIMBY – VOX
• Builders Slump as U.S. Housing Market Shifts to the Slow Lane – Bloomberg
• Is There a Better Way to Measure Housing Affordability? – Harvard Joint Center for Housing Studies
• Elizabeth Warren’s Ambitious Fix for America’s Housing Crisis – The Atlantic
• School shootings affect school quality, housing value – University of Illinois at Urbana – Champaign
• Building More Houses Isn’t Always the Answer – Bloomberg

On other countries:

• [Chile] ¿Cómo influye la cercanía del Metro en el valor de una propiedad? – CNN
• [China] Understanding Real Estate Price Dynamics: The Case of Housing Prices in Five Major Cities of China – Journal of Housing Economics
• [China] How Much Would China’s GDP Respond to a Slowdown in Housing Activity? – Federal Reserve Bank of Kansas City
• [China] China Developers’ Funding Source at Risk in Sales Crackdown – Bloomberg
• [Germany] Germany sets out measures to tackle affordable housing shortage – Reuters
• [Germany] Germany’s soaring housing prices spark calls for reform – Deutsche Welle
• [Hong Kong] Higher interest rates threaten overvalued property markets – Financial Times
• [Hong Kong] Hong Kong at greatest risk of housing bubble: UBS – Financial Times
• [United Kingdom] Is Richmond the Nimbyest place in London? – Financial Times

Photo by Aliis Sinisalu

On cross-country:

• Q2 2018: Global house price boom – strong house price rises continue in Europe and parts of Asia – Global Property Guide
• Eurozone housing market cycle is maturing – ING
• Disillusion mounts in Europe’s housing market – ING

On the US:

• Price-to-Income Ratios are Nearing Historic Highs – Harvard Joint Center for Housing Studies
• Why do so many affordable-housing advocates reject the law of supply and demand? – Washington Post
• The Mortgage Market Is Back a Decade After the Credit Crisis—With New Risks – Bloomberg
• Jeff Bezos Homeless Pledge Follows Amazon Fight Against Housing Tax – Bloomberg
• Census: Renters’ Incomes Still Lagging Behind Housing Costs – Center on Budget and Policy Priorities
• New evidence shows manufactured homes appreciate as well as site-built homes – Urban Institute
• ‘As safe as houses’: How a small corner of the US mortgage market nearly brought down the global financial system – Bank of England
• Does Rising Housing Inventory Signal the Beginning of a Buyer’s Market? – First American
• The Wealth Hiding in Your Neighborhood – Institute for Policy Studies
• Luxury Real Estate Boom Adds to Risk of Climate Disruption – Institute for Policy Studies
• Tough Times Ahead for Housing – Wall Street Journal

On other countries:

• [Brazil] Brazil’s house prices still falling, but outlook positive – Global Property Guide
• [China] China’s Weakest Housing Markets Flash Red in Cautionary Tale – Bloomberg
• [China] One of China’s Wildest Housing Markets Is Broken – Bloomberg
• [China] How China’s plan to develop rental housing backfired – Reuters
• [Chile] Chile’s house prices continue to rise modestly, despite the imposition of 19% VAT on property sales – Global Property Guide
• [Ireland] Ireland sets up land agency as anger grows at housing shortage – Reuters
• [Ireland] Dublin’s Housing Crisis Reaches a Boiling Point – CityLab
• [Malta] Malta house price growth outstrips Hong Kong to take top ranking – Financial Times
• [New Zealand] New Zealand’s house prices are rising again – Global Property Guide
• [South Korea] Korea imposes tougher taxes on properties to curb price surge – Reuters
• [Ukraine] Ukraine’s house price falls accelerating – Global Property Guide
• [United Kingdom] Is UK property still a good investment? – Financial Times
• [United Kingdom] K. House Prices at Risk From Brexit – Bloomberg

Photo by Aliis Sinisalu

From the IMF’s latest report on Norway:

“House prices in Norway have been growing rapidly in recent years. As of May 2018, nationwide house prices were 55 percent higher than in 2010. The national house price to income ratio remains historically and internationally high. Although house prices fell in 20172— particularly in Oslo, which saw nominal house price declines of 10.5 percent—the correction was short lived. House prices rose again by 7.5 percent during January to May of 2018 on a seasonally-adjusted basis.

There has been a significant regional divergence of house price trends since 2013. Real house prices in Oslo now stand 60 above their 2010 level—compared to 35 percent for the whole of Norway. House prices in Oslo have been increasing particularly quickly compared to other regions since 2013. This represents a contrast to the last period of rapid house price appreciation—before the global financial crisis—when house prices grew evenly across Norway.

Large differences in house prices across regions can have macroeconomic implications. There is growing evidence that large house price differentials can limit regional labor mobility, thus slowing income and productivity convergence (Ganong and Shoag, 2015; Hsieh and Moretti, 2017). House price differentials—to the extent they translate into higher household debt and debt servicing costs—can make some local economies more sensitive to abrupt house price corrections than the others, thus providing arguments in favor of region-specific rather than nation-wide policies to mitigate financial vulnerabilities.

In this analysis we estimate the extent to which the recent regional house price divergence in Norway can be explained by fundamental factors. Section B looks at the recent trends in regional house prices, demand and supply factors more in detail. Section C describes our econometric approach to estimating regional equilibrium house prices, and provides main findings on the extent of house price over- or under-valuation across Norwegian regions. Section D studies the impact of house price differentials on labor mobility in Norway. Section E concludes.”