The Unassuming Economist

From the IMF’s latest economic report on Poland:

While the recent recovery in global housing markets is a welcome development, we need to guard against another unsustainable boom. says IMF’s Deputy Managing Director Min Zhu in a blog. He also gave the opening remarks at the Bundesbank/German Research Foundation/IMF Conference that took place recently. 

“By historical and international comparisons and some measures of affordability New Zealand’s house prices appear elevated (…). This in part reflects a limited housing stock from low housing investment in recent years and geographical constraints preventing a rapid housing supply response. With house price inflation running high, there remains the risk that expectations-driven, self-reinforcing demand dynamics and price overshooting could take hold.
The government’s steps to help alleviate supply bottlenecks, measures to tighten standards for
mortgage lending (…), and an increase in mortgage rates should help ease price pressures. But a sudden price correction—possibly triggered by a shock to household incomes or borrowing costs—could reduce consumer confidence, impact overall economic activity,
and hurt banks’ balance sheets,” according to the IMF’s new economic report on New Zealand. 

“With monetary conditions remaining accommodative and housing prices [in Switzerland] growing faster than incomes, measures to curb mortgage demand especially from the more vulnerable households need to be strengthened,” says the latest IMF’s annual report on Switzerland. Read the report here for a dedicated section on the housing market. 

“(…) the level of overvaluation [in house prices in Finland] is lower than in other Nordic countries. However, the national average conceals rapid growth in prices in large metropolitan areas (…),” according to the IMF’s economic report on Finland. 

More specifically, it says that “House prices have risen the fastest in metropolitan areas. The pace of house price growth has been pronounced in Helsinki and other highly developed areas despite the crisis, but less so in other regions, especially where there have been declines in manufacturing and industry. Similar dynamics are evident in the relative prices of smaller dwellings compared to larger properties or detached homes, underscoring the upward pressures on house prices in highly populated areas.” The report also talks about macroprudential policies, read the full report here.