The Unassuming Economist

On cross-country:

• A quarter of household expenditure allocated to housing – Eurostat
• The Problem With Expensive Real Estate – Bloomberg
• Capacity Building & Disseminating best practices in affordable housing – Housing Europe

On the US:

• More reactions to House Tax Reform Bill – Curbed, Foreign Affairs, NAHB, Politico, Seattle Times
• A duopsony built around rent-seeking – American Enterprise Institute
• After a Natural Disaster, Do Landlords Jack Up the Rent? – Priceonomics
• Why Does Land-Use Regulation (Still) Matter in Oregon? – Cato Institute
• House and Senate Tax Plans Cut Affordable Housing, Set Stage for Deeper Cuts Later – Center on Budget and Policy Priorities
• The Mortgage Credit Channel of Macroeconomic Transmission – MIT
• What the Housing Market in America Needs Is More Options – Smithsonian

On other countries:

• [Australia] Speech on Mortgage Insights From Securitisation Data – Reserve Bank of Australia
• [Australia] Regional housing supply and demand in Australia – Australian National University
• [Brazil] Loan-to-value policy and housing finance: effects on constrained borrowers – Bank for International Settlements
• [Canada] Even Real Estate Developers Can’t Afford Toronto’s Housing Market – Bloomberg
• [China] China to step up property market regulation to avoid bubble risk – Reuters
• [Japan] Is Tokyo’s property market reaching its peak? – Financial Times
• [Romania] Housing privatization in Romania – Economics of Transition
• [Sweden] Slowdown in Swedish house prices is ‘positive’ for stability – Riksbank – Financial Times
• [Sweden] Riksbank Governor Tries to Quell Fears of Swedish Housing Slump – Bloomberg
• [Switzerland] Zurich’s Public Housing Problem: The Tenants Are Too Rich – Citylab
• [Switzerland] Lessons from Zurich – Inside Housing
• [United Kingdom] Your regular reminder that stamp duty cuts make nearly no difference to anything – Financial Times
• [United Kingdom] 2017 Autumn Statement Response – Cluttons

The IMF’s latest report on Philippines says that “However, credit growth has accelerated from 13.6 percent in 2015 to 19.7 percent in July 2017, led by consumer credit and real estate loans. Although most indicators show no evidence of a credit boom so far, property prices have stabilized, and lending standards have not deteriorated, some indicators suggest that, under current trends, credit gaps could approach early warning levels of credit booms in 2017−18 (…)”.

From IMF’s latest report on Sweden:

“The Swedish housing market has deep structural problems. Large house price increases were necessary to overcome the hurdle of high construction costs before construction began rising. These costs reflect a combination of complex building regulations and limited competition in the sector owing to cumbersome municipal land sale and planning and approval procedures. The resulting supply shortfalls are present in 255 out of 290 municipalities, but are mostly in the three major metropolitan areas (Stockholm, Gothenburg, and Malmo) owing to ongoing urbanization. Moreover, strict rent controls have resulted in a declining supply of rental apartments as they are converted into tenant-owned condominiums and as existing renters are “locked-in”. The resulting long waiting times for rental apartments leave many households with no option but to purchase housing, which is incentivized by the tax deductibility of mortgage interest payments.”

“Low housing affordability undermines financial stability, growth, and equality. Home costs relative to median household income have more than doubled since the mid-1990s (…). In Stockholm, the price-to-income ratio is nearly twice the national average and is among the highest worldwide. These factors reduce labor mobility, especially for those from outside the main centers, hindering inclusive growth. Equity is further undermined by overcrowding among low-income groups and the need to rely on parental savings for housing purchases. Households must borrow more at higher house prices, lifting household debt to 182 percent of disposable income (…), with new purchasers taking on debts averaging 402 percent of their disposable income.”

“Policies to bolster construction are welcome yet are unlikely to be sufficient to rebalance the housing market. The government targets building 250,000 dwellings during 2015– 20, including by subsidizing (0.1 percent of GDP) construction of affordable rental housing—which meets energy efficiency and rent limit requirements—and through state financing to municipalities for infrastructure related to housing development. Although construction has risen (…), housing starts only modestly exceed estimated household formation in most of the country, indicating that shortages will persist. Moreover, due to high land prices and construction costs, new development has been focused on the high-end of the market or located in more remote areas.”

“Improving housing affordability should be a central priority, supported by deep structural reforms to promote more efficient use of existing property:

• Sustaining housing supply. High construction costs in Sweden need to be addressed by streamlining building regulations and promoting competition in the sector, including by harmonizing fragmented planning and approval processes. Improving public transportation within regions would help relieve demand pressures in major centers. Budgetary support for construction of rental housing that meets affordability tests should be expanded.

• Phasing out rent control. Providing incentives to better match housing to household needs will effectively increase supply in areas with high demand. All new construction of rental apartments should be fully exempt from controls. Rents on apartments under control should be steadily aligned with market rates, with low-income households protected by the housing allowance.

• Addressing tax incentives. To promote efficient use of space, the composition of property taxes should be shifted by cutting capital gains taxes that deter sales while raising the recurrent property tax, which in 2008 was capped at a level among the lowest in OECD. If the property tax cannot be raised, it becomes more critical to reduce mortgage interest deductibility to ease demand and discourage high leverage. The macroeconomic impact would be modest while interest rates are low and such reforms could be part of a package that benefits households.”

“Authorities’ Views. The authorities recognize the structural challenges in the Swedish housing market, as reflected in the appointment of committees to review the planning and building regulations as well as the model for setting rents on newly produced rental housing. The authorities also recognize the need for further measures to reduce incentives for over-indebtedness. Political opposition to property tax is strong as it is considered to be unfair, and while a lower capital gains tax could improve property turnover, it could have distributional effects favoring older households that had often accumulated significant wealth. The government’s view is that a reduction in mortgage interest deductibility is more feasible if broad political consensus can be reached. With rents on newly-produced rental properties being very high, the government is concerned that a transition to market-based rents would bring high rents, and it also has doubts that the supply of rental housing within the reach of lower income households would increase significantly. The Riksbank, on the other hand, stresses that a more market-based rent system would increase supply, benefitting young people.”

On cross-country:

• 8th Global Housing Finance Conference (May 30-June 01, 2018) – World Bank
• How Cities Are Tightening the Leash on Airbnb – Citylab
• Housing policy and marriage: evidence from Egypt, Jordan and Tunisia – Economic Research Forum

On the US:

• Implications of US Tax Policy for House Prices, Rents, and Homeownership – American Economic Review
• America’s Republicans take aim at mortgage subsidies – Economist
• How Many Hours Americans Need to Work to Pay Their Mortgage – Visual Capitalist
• Labor Market Improvement and the Use of Subsidized Housing Programs – Federal Reserve Bank of Kansas City
• Stuck in Subprime? Examining the Barriers to Refinancing Mortgage Debt – Federal Reserve Bank of Philadelphia
• Home Equity Wealth at New High – HousingViews
• Low-Income Housing Tax Credit: Costly, Complex, and Corruption-Prone – Cato Institute
• Bank Think Mortgage deduction helps housing lobby, but not homeowners – American Banker
• New research says it’s better to buy than rent—and it has nothing to do with money – Quartz

On other countries:

• [Australia] A rare dose of honesty in the housing affordability debate – MacroBusiness
• [Canada] Immigration, Capital Flows, and Housing Prices – British Columbia
• [Canada] Vancouver Limits Airbnb, in an Effort to Combat Its Housing Crisis – New York Times
• [Germany] Ticking time-bomb lies under Berlin’s property market – Financial Times
• [Germany] Spreading housing shortage hits over 850,000 people in Germany – Reuters
• [India] Home Price Rises Slow in India Thanks to Modi’s Cash Ban – Bloomberg
• [Ireland] Irish house prices: Déjà vu all over again? – Economic & Social Research Institute
• [Netherlands] Amsterdam returns Dutch house prices to 2008 highs – Financial Times
• [Sweden] UPDATE 3-Sweden’s FSA proposes tighter mortgage rules as housing market slows – Reuters
• [Sweden] Sweden’s big banks call an end to decades-long housing boom – Financial Times
• [Sweden] The Shock of Sweden’s Housing Market is Hitting the Country’s Currency – Bloomberg
• [United Kingdom] However you analyse it, housing in Britain is a mess – Financial Times
• [United Kingdom] Solving UK housing crisis requires more than new homes – Financial Times

Photo by Aliis Sinisalu

On cross-country:

• Why I won’t buy a house in any major city – and neither should you – World Economic Forum
• Migration and Its Impact on Cities – World Economic Forum
• Why there? Developers’ rationale for building social housing in the urban periphery in Latin America – Cities
• Prime Global Cities Index – Q3 2017 – Knight Frank
• Homes and Mortgages 2017 – Housing Costs and Prices – ING
• Public expenditure on housing: the shift from capital spend to housing allowances. A European trend? – National Housing Federation
• Demographic structure and housing prices: East Asia and Europe – Ideas
• Bloomberg Global City Housing Affordability Index – Bloomberg

On the US:

• Reactions to Tax Change on Mortgages – Atlantic, Bloomberg, CNBC, Curbed, HousingWire, MarketWatch, New York Times, Wall Street Journal
• Sustainable housing finance – American Enterprise Institute
• Sustainable housing finance: Private Sector Perspective on Housing Finance Reform – Urban Institute
• The Human Cost of Zoning Regulation – Cato Institute
• Why Do People Move and Why Don’t They? – Cato Institute
• Tax Reform and Affordable Housing Subsidies – Cato Institute
• Stuck! The Law and Economics of Residential Stagnation – Yale
• Regulation, Land Constraints, and California’s Boom and Bust – Regional Science and Urban Economics
• Detroit: From Motor City to Housing Incubator – New York Times
• From the archives: Fed chair nominee Powell on housing finance reform – American Enterprise Institute
• Airbnb: A Good Neighbor? – Harvard Political Review
• The Fight Over Fair Housing Goes to Court (Again) – Citylab

On other countries:

• [Bulgaria] A Roof Over Our Heads: Ensuring Adequate Housing for All Bulgarians – World Bank
• [Finland] Why housing policy in Finland is a success story – Housing Europe
• [India] Time to rethink public housing? – The Hindu
• [New Zealand] New Zealand to ban foreign home buyers – Global Property Guide
• [Norway] Housing Crash Dodged in Norway, But Intervention Door Stays Open – Bloomberg
• [United Kingdom] London’s bubbly housing market goes flat – Economist
• [United Kingdom] FT Money Show: Property prices, self build and pension transfers – Financial Times
• [United Kingdom] How to solve the UK housing crisis – Financial Times
• [United Kingdom] Housing Market Discount Rates: Evidence from Property Taxes – London School of Economics

Photo by Aliis Sinisalu