The Unassuming Economist

From the IMF’s latest report on Lithuania:

From the IMF’s latest report on France:

“Spending on housing is among the highest among European countries, with mixed outcomes for vulnerable groups (…). Similar to the UK, France spends 1.3 percent of GDP on housing development and housing benefits compared to 0.4 percent and 0.2 percent in Germany and Italy respectively. However, this is associated with mixed outcomes: while the overburden rate of poor households is among the lowest in France (16 percent compared to 37 percent in the UK), the number of rooms per person in poor households is lower in France than in the UK and in Germany, and houses of those at the lowest end of the income distribution in France are three times more overcrowded than in the UK.”

 

From Visual Capitalist:

“With a decade-long bull market and an ultra low interest rate environment globally, it’s not surprising to see capital flock to housing assets.

For many investors, real estate is considered as good of a place as any to park money—but what happens when things get a little too frothy, and the fundamentals begin to slip away?

In recent years, experts have been closely watching several indicators that point to rising bubble risks in some housing markets. Further, they are also warning that countries like Canada and New Zealand may be overdue for a correction in housing prices.

Key Housing Market Indicators

Earlier this week, Bloomberg published results from a new study by economist Niraj Shah as he aimed to build a housing bubble dashboard.

It tracks four key metrics:

1. House Price-Rent Ratio
   The ratio of house prices to the annualized cost of rent
2. House Price-Income Ratio
   The ratio of house prices to household income
3. Real House Prices
   Housing prices adjusted for inflation
4. Credit to Households (% of GDP)
   Amount of debt held by households, compared to total economic output

Ranking high on just one of these metrics is a warning sign for a country’s housing market, while ranking high on multiple measures signals even greater fragility.”

Continue reading here.

On cross-country:

• House prices up by 4.0% in both the euro area and the EU – Eurostat

On the US:

• Is rent control making a comeback? – Brookings
• Tackling zoning to help the middle class: 5 policy approaches – Brookings
• Survey Shows Decline in Foreign Investment in U.S. Residential Real Estate – National Association of Realtors
• 5 Lessons from Cities On Affordable Housing – Politico
• Can Robots Solve the Affordable Housing Crisis? – Politico
• Only Washington Can Solve the Nation’s Housing Crisis – New York Times
• Amazon HQ2 Is Upending Northern Virginia’s Already Unstable Housing Market – New York Times
• Property taxes stunt Chicago’s house price growth – Financial Times
• Is California’s apartment market broken? – Brookings
• Housing Affordability and Zoning Reform – Cato
• Wave of Hispanic Buyers Boosts U.S. Housing Market – Wall Street Journal
• A Home Builder Perspective on Housing Affordability and Construction Innovation – Harvard Joint Center for Housing Studies
• Gentrification ‘benefits local residents’, research finds – Financial Times
• Housing’s ‘Missing Middle’ Keeps Shrinking – Bloomberg
• Steep Slowdown Projected in Home Improvements – Harvard Joint Center for Housing Studies

On other countries:

• [China] When Affordable Housing in Shanghai Is a Bed in the Kitchen – Citylab
• [Netherlands] “Mortgage Interest Tax Deduction in the Netherlands: A Welcome Relief” – Netherlands Bank
• [Puerto Rico] Puerto Rico’s housing market improving – Global Property Guide
• [Qatar] Qatar’s housing market is recovering – Global Property Guide
• [United Arab Emirates] UAE’s property prices fall further – Global Property Guide
• [United States]S. housing market gradually cooling – Global Property Guide

*Please note that the Housing View will be on hiatus until September 8. 

From the IMF’s latest report on Singapore:

“The private housing market showed signs of overheating in 2017-18. Average monthly transactions increased by 35 percent in the year through June 2018, compared to the previous two years, and prices increased by 9.1 percent year-on-year in 2018Q2. Developer land purchase activity, including en-bloc purchases, in 2016-2018H1 led to high bidding activity (also implying a rising housing supply over the medium term). The number of foreigners purchasing properties, as well as the transactions values, increased significantly in 2017 and early 2018. In this context, the FSAP analysis found that foreigner residential property purchases had an upward effect on property prices (…).

The authorities tightened macroprudential measures in July 2018 to cool off a rapid increase in real estate prices. In view of rising house prices fueling overvaluation and raising the level of systemic risk, the authorities implemented a package of measures that tightened LTV limits and raised the Additional Buyer’s Stamp Duty (ABSD) for residential property purchases to reduce the risk of a destabilizing price correction. Specifically, for individuals, loan to value (LTV) ratio limits were lowered for all mortgages, and ABSD rates were raised by 5 percentage points, except for Singaporeans and permanent residents buying first properties. For non-individuals, LTVs were lowered and the ABSD was raised by 10 percentage points, with an additional 5 percentage points for housing developers. The differentiation between residents and non-residents in the ABSD was maintained. In response to these policies, house price growth slowed, transactions declined, especially in the private market, and mortgage credit edged down (though remaining high as a share of GDP). Nonetheless, property prices remained moderately overvalued.”