The Unassuming Economist | Developments in Israel’s Housing Market

Showing posts with label Global Housing Watch. Show all posts

Monday, September 21, 2015

Developments in Israel’s Housing Market

The IMF’s latest report on Israel points out that “To contain further housing price increases, supply needs to be boosted. Concerted efforts among relevant ministries and local governments are needed. To contain the increase in leverage, macroprudential measures should be used.”

Another IMF report compares the system of taxation on housing in Israel with other countries. It finds that “The current framework of housing taxation in Israel is broadly in line with global standards, but with few elements that have likely increased underlying demand for housing. (…) The Israeli government has appropriately taken steps to tighten the eligibility of exemptions for the capital gains, acquisition tax, and gift taxes. (…) Addressing the supply-side issues will be critical.”

Read the full article…

Posted by Prakash Loungani at 9:00 AM

Labels: Global Housing Watch

Friday, September 18, 2015

Housing Market in Saudi Arabia

“The government is continuing to implement its program to provide affordable housing. In light of the growing population and reported high house prices in the major cities, this is a considerable challenge. Estimates suggest that 160-180,000 new homes will need to be built each year over the next few years to meet growing demand. The government has allocated SR 250 billion from the budget surplus fund for the program, and the Ministry of Housing is continuing to develop options to support buyers which include the provision of interest-free loans (up to SR 500,000), and the payment of interest on behalf of the borrower for mortgage loans taken out from banks. The provision of support to buyers is being allocated according to a points system that favors those with greater need. On the supply side, options being developed include the provision of free public sector land and the proposed “white lands tax” which would increase the land available for housing”, according to the IMF’s annual report on Saudi Arabia.

The report also “(…) emphasized the need for ensuring that the housing needs of the population are met in a cost-effective way while minimizing the disruption to private real estate and mortgage markets. Housing is appropriately an important policy priority, but the program cost is high and to date it has moved slowly. Measures to expand supply should include a strengthened role for the government acting as a facilitator and regulator rather than a developer to help expand housing supply in a cost effective way. In this context, streamlining regulatory and approval processes to achieve efficiency gains could improve the functioning of private real estate markets. With respect to the support for buyers, financing should be targeted to those who are unable to obtain financing from banks or finance companies, and focus on purchases of new dwellings to avoid bidding real estate prices up further.”

Posted by Prakash Loungani at 9:00 AM

Labels: Global Housing Watch

Wednesday, September 16, 2015

Rising House Prices and Household Debt: A Twin Boom in Norway?

“The Norwegian housing market was only moderately affected by the global financial crisis, and the rising trend of house prices resumed shortly after the crisis. In the meantime, household debt reached more than 200 percent of disposable income, and it is expected to grow further”, a new IMF paper examines the characteristics of household debt and the factors driving the housing boom and debt accumulation. The paper also examines the potential macroeconomic impact of a possible house price correction. Read the report here.

Moreover, a second report, notes that “House price developments vary considerably across regions, with the Oslo area recording relatively more robust price growth while the Stavanger area where petroleum activity is concentrated showing more subdued growth. (…) most estimates suggest that house prices are significantly overvalued.”

Finally, a third report takes a look at what could be the impact of a decline in house prices on the financial system. The report notes that “Stress tests suggest that under severe macroeconomic shocks banks and life insurers could face important but manageable capital shortfalls. A combination of severe shocks—including protracted low oil prices and a sharp contraction in house prices—could result in an aggregate capital shortfall for banks of up to 4.6 percent of GDP over five years.”

Posted by Prakash Loungani at 9:00 AM

Labels: Global Housing Watch

Monday, September 14, 2015

Macroprudential Policies in the Philippines

The IMF’s report on the Philippines points out the macroprudential policies that have been implemented. The report says: “In light of the acceleration in credit growth in 2014 and risks of domestic asset price booms, the BSP [Central Bank of Philippines] conducted stress tests on banks’ real estate loan exposures and required corrective actions, enhanced monitoring of banks’ exposures to all types of real estate, and provided guidance on real estate mortgage loans, setting their maximum loan value at 60 percent of the appraised value. These measures have helped to restrain credit growth to the real estate sector. Single borrower limits (set at 25 percent of core capital) should be strictly enforced with the additional 25 percent allowance for exposures to PPPs allowed to lapse.”

Read the full article…

Posted by Prakash Loungani at 9:00 AM

Labels: Global Housing Watch