The Unassuming Economist

On cross-country:

• Hot Property: The Housing Market in Major Cities – SpringerLink
• Q1 2019: Continued strong house price rises in Europe and Asia-Pacific, but globally housing markets are slowing – Global Property Guide
• Summer 2019 Issue – Real Estate Economics
• The Housing Cycle: What Role for Mortgage Market Development and Housing Finance? – Journal of Real Estate Finance & Economics
• Real estate: post-crisis boom draws to a close – Financial Times
• Investors Are Buying More of the U.S. Housing Market Than Ever Before – Wall Street Journal

On the US:

• Why Housing Policy Feels Like Generational Warfare – The Atlantic
• Cities Start to Question an American Ideal: A House With a Yard on Every Lot – New York Times
• Land Use Regulation and Housing Prices – University of Pennsylvania
• New York property barons lose grip on state politics – Financial Times
• Roy on Resegregation and Other Roots of the Housing Crisis – UCLA
• Will Fannie and Freddie get a new sibling? – MarketWatch
• Los Angeles Is in Crisis. So Why Isn’t It Building More Housing? – The Atlantic
• On Rent Subsidies and Affordable Housing – Wall Street Journal
• Is America Finally Waking Up to Its Government-Created Housing Crisis? – Reason
• Minimum Wage Still Can’t Pay for a Two-Bedroom Apartment Anywhere – Citylab

On other countries:

• [Australia] Understanding Rising Housing Loan Arrears – Reserve Bank of Australia
• [Ireland] ESRI urges more aggressive site tax to spur housing supply – The Irish Times
• [Lithuania] Lithuania’s modest house price rises – Global Property Guide
• [Mexico] Mexico’s housing market is strengthening – Global Property Guide
• [Netherlands] Netherlands’ house prices continue to rise, albeit at slower pace – Global Property Guide
• [Norway] Norway’s housing market is losing steam – Global Property Guide
• [Singapore] Singapore’s house price growth slowing again – Global Property Guide
• [Spain] Spain’s housing market remains healthy – Global Property Guide
• [Spain] Spain Is Latest Battleground for Global Affordable Housing – Bloomberg
• [Taiwan] Taiwan’s housing market improving – Global Property Guide

This chapter describes the evolution of IMF monitoring—“surveillance” in the IMF’s jargon—of housing markets from 2008 to the present. It explains how the IMF has assessed overvaluation in housing markets and the advice offered on the policy tools needed to manage house price booms. The IMF’s ‘corporate view’ or ‘house view’ that macroprudential policies must be the first line of defense to deal with house price booms is laid out. The chapter also discusses whether the run-up in house prices over the past few years should be a source of worry. Lastly, the chapter describes how IMF surveillance has adapted as housing markets have become more ‘glocalized’ and developments at the sub-national level gain greater prominence.

In April 2008, the IMF’s flagship publication World Economic Outlook provided estimates of overvaluation in house prices for a group of advanced economies. Though house prices had fallen in the United States in the preceding years, they had continued to rise in many other countries. The IMF’s analysis suggested that, with only a few exceptions, house prices were overvalued by between 10% and 30%, as shown by the bars in Fig. 7.1. The dots show the decline in house prices that occurred over the subsequent 4 years. In many countries where the IMF had assessed house prices to be overvalued, house prices did indeed fall quite significantly—these cases include Denmark, Ireland, the Netherlands and the United Kingdom.

Fast forward to the present: The IMF’s Global House Price Index—a simple average of real house prices for 57 countries—is now back to its level before the global financial crisis (GFC). The index has been inching up since 2012, making the duration of the run-up comparable to one in 2001–06 that ended in house price collapses in many countries. Is it time to worry again about overvaluation?

Read the rest of chapter here and the book here.

From the IMF’s latest report on Ireland:

“Unlike during the pre-crisis period, rising housing prices have not been fueled by excessive credit but rather by a lagging supply response to rising demand. Robust job creation, rising wages, low interest rates, and population growth have all contributed to a strong recovery in housing demand since 2013. The supply of housing, however, has not kept pace. The main factors that have prevented a faster expansion in housing supply are constraining regulations, weaknesses in the zoning and planning process, financial difficulties of construction firms, skills shortages in the construction sector, and land hoarding.

The government has taken several measures to increase housing supply, develop the rental market, and improve affordability.1 The Rebuilding Ireland Action Plan for Housing and Homelessness, announced in July 2016, seeks to double the annual level of residential construction to 25,000 homes by 2020, deliver an additional 50,000 social housing units in the period to 2021, and meet the housing needs of an additional 87,000 households through housing assistance schemes. Home Building Finance Ireland, a newly established state lender for financially constrained developers, aims to deliver up to 7,500 new homes over the next five years, financed by a €750 million investment from the Ireland Strategic Investment Fund. Other initiatives include an infrastructure fund designed to provide local public infrastructure to facilitate housing development, and a new fast-track planning process for large-scale housing developments.

There are indications that the housing supply will continue to expand. The number of new dwellings connected to the electric grid increased by 17 percent in 2018—the fifth consecutive year of growth, albeit from a low base—while new dwelling completions have also grown rapidly. Forward-looking indicators point to further growth. Building permits granted for the construction of houses and apartments increased by 8.5 percent year-on-year in 2018:Q3, and employment continues to increase in the construction sector.”

 

From the IMF’s latest report on Czech Republic:

“The housing market remains pressured.

Despite a recent deceleration, house price growth was still among the 5 highest in the EU in 2018, outpacing wage and income growth (Figure 7). In Prague, where most property transactions take place, offered prices for apartments have increased by 44 percent in the three years from 2016 to 2018. The price-to-income ratio has increased by a cumulative 12.6 percent between 2015: Q4 and 2018: Q4, after having been stable over the preceding 5 years. House price increases have also made a substantial contribution to the measure of CPI targeted by the CNB.

Private nonfinancial sector credit accelerated from the previous year, growing ahead of nominal incomes. This was driven primarily by mortgage credit, which continues to grow at a high rate (…). But new mortgage volumes are decreasing amid increasing lending rates and tighter macroprudential borrower recommendations. Nonfinancial corporate lending growth also increased in 2018.”

On cross-country:

• Global House Price Index – Q1 2019 – Knight Frank
• Literature Review Article: Recent Developments in the Economics of Housing – Elgar Research Reviews in Economics
• The evolution of prime property pricing across global cities – Knight Frank
• Recent changes in housing policies and their distributional impact across Europe – EURMOD

On the US:

• Fix Mortgage Finance, or We’ll Do It for You, Regulator Tells Congress – Wall Street Journal
• Landmark Deal Reached on Rent Protections for Tenants in N.Y. – New York Times
• We need more housing. Local governments are standing in the way – Washington Post
• The Largest Co-Living Building in the World Is Coming to San Jose – Citylab
• The surprisingly effective pilot program stopping real estate money laundering in the US – Quartz
• Affordable Housing Is Not an Easy Fix, Lens Says – UCLA
• Recalibrating Local Politics to Increase the Supply of Housing – Cato Institute
• Housing Lab helps startups that aim to make housing less expensive – UC Berkely
• Housing Crunch Sends Bigger Populations to Smaller Towns – The Pew Charitable Trusts

On other countries:

• [Canada] Canada’s house price boom takes off – Global Property Guide
• [China] Chinese city tells property developers to cease offering drastic price cuts – Reuters
• [China] China’s debt disease might wreck its uncrashable housing market – Quartz
• [Finland] Finland’s housing market remains weak – Global Property Guide
• [Greece] Greek housing sector rebound gains pace as economy recovers – Reuters
• [Hong Kong] The Trade War Could Pop Hong Kong’s Property Bubble – Bloomberg
• [Indonesia] The housing market in Indonesia rarely makes big moves – Global Property Guide
• [Latvia] Latvia’s house prices are now falling – Global Property Guide
• [New Zealand] New Zealand’s house prices rising strongly again – Global Property Guide
• [Thailand] Thailand’s modest house price rises – Global Property Guide
• [Spain] Recent housing market developments in Spain – Banco de España
• [Spain] The Spanish housing market: is it fundamentally broken? – IDEAS