The Unassuming Economist

From the IMF’s latest report on Belgium:

“Increased vulnerabilities from real estate call for supervisory vigilance and possible use of macroprudential policies to mitigate stability risks. Despite the crisis, prices of residential and some commercial RE segments (e.g., logistics) have risen, also supported by low interest rates. In addition, house prices benefitted from the channeling of some of the excess savings accumulated during the pandemic (€25 billion, 5½ percent of GDP, in 2020) into residential properties. In a market correction the quality of RE assets, which account for a sizable share of financial-sector portfolios, may deteriorate. The NBB has appropriately maintained a risk-weight add-on for housing loans in place since December 2013 and affirmed December 2019 supervisory expectations that set limits on riskier mortgage lending. Market developments should be closely monitored for price misalignments. If imbalances mount, macroprudential tightening should be considered to constrain lending to highly-leveraged borrowers and strengthen buffers, also encompassing the commercial segment.”

From the IMF’s latest report on the Philippines:

From the IMF’s latest report on Lithuania:

“The positive developments in the housing market so far are estimated to be in line with fundamentals. However, if signs of elevated risks in particular sectors or overheating of the economy start to emerge, targeted macroprudential tools or reactivation of the CCyB will be necessary.”

From the IMF’s latest report on Latvia:

“While real estate prices have been on a prolonged uptrend, robust wage growth and similar price dynamics in regional peers suggest that house prices remain broadly aligned with fundamentals. However, the expected surge in construction, backed by a large inflow of EU-investment funds, could renew overvaluation concerns in property prices.”

From the IMF’s latest report on Croatia:

“Housing loans remained strong during the pandemic. In 2020, about 10 percent of the households negotiated a debt-service moratorium. Most had expired by March 2021. Uncollateralized general-purpose cash loans declined. The increasing NPL ratio for these loans may be an opportunity to revisit some of the credit scoring models. Conversely, housing loans have continued to grow, underpinned by low interest rates, favorable taxation, and the support scheme for first time buyers.

The growth of real estate prices decelerated, and the number of transactions declined during the pandemic. The Airbnb markets in the capital area and on the coast proved relatively resilient. The CNB estimates that the composite real-estate price index is now slightly above what is warranted by fundamentals. The two earthquakes and increasing prices on construction materials have added to the cost pressures. Although some transactions are credit financed, others are driven by foreigners (mainly on the coast) and wealthy Croatians with higher savings. Still, if housing prices accelerate further beyond fundamentals, macroprudential measures should be considered. The current implicit debt-service-to-income (DSTI) ratio only refers of housing loans and cash loans with maturities of five years and longer. A formal DSTI should ideally cover all debt-service, including leasing. The strengthened macroprudential authority granted to the CNB and its new granular database should help both monitoring and calibration of possible borrower-based macro-prudential measures in the event of a credit-driven housing boom.”