The Unassuming Economist

On cross-country:

• Global Residential Cities Index – Q1 2017 – Knight Frank
• Economic Activity, Credit Market Conditions, and the Housing Market – Macroeconomic Dynamics

On the US:

• FED Governor Jerome H. Powell on The Case for Housing Finance Reform – Speech, Event Video, and Coverage: Financial Times
• Are Home Prices Really Above Their Pre-Recession Peak? – Harvard Joint Center for Housing Studies
• Housing Sentiment at Record High as Consumers’ Confidence in Home-Selling Environment Strengthens – Fannie Mae
• What you want to know about California’s failed housing affordability law – Los Angeles Times
• It’s time for cities to start building their fair share of housing – Los Angeles Times

On other countries:

• Australian Housing ‘Bubble’ Fears Overblown, HSBC Economist Says – Bloomberg
• [Canada] Rental Ownership Structure in Canada – Canada Mortgage and Housing Corporation
• [Canada] Ontario’s One Cylinder Economy: Housing in Toronto and Weak Business Investment – Fraser Institute
• [Canada] Restrictive Land-Use Regulation: Strategies, Effects and Solutions – Frontier Centre for Public Policy
• [China] Relationship between the Chinese housing and marriage markets – VoxDev
• [China] The bubble dynamics of China’s housing boom – VoxDev
• [Germany] Cheap credit not fuelling German real estate bubble for now- central banker – Reuters
• [Norway] Are House Prices Overvalued in Norway? – IMF
• [Switzerland] UBS and Credit Suisse cut back on domestic mortgages – Financial Times

From a new IMF report:

“Inclusive growth is a priority that resonates globally today. It relates to a broad sharing of the benefits of, and the opportunities for, economic growth, and reflects growth that is robust and broad-based across sectors, promotes productive employment across the labor force, embodies equal opportunities in access to markets and resources, and protects the vulnerable.

The G20 has emphasized the need for inclusive growth. In this regard, the Hangzhou G20 leaders’ Summit in September 2016 renewed the emphasis on inclusive growth called for the forging of both a narrative for strong, sustainable, balanced and inclusive growth and for adopting a package of policies to make this possible. The communique stated that the G20 would “work to ensure that our economic growth serves the needs of everyone and benefits all countries and all people including in particular women, youth and disadvantaged groups, generating more quality jobs, addressing inequalities and eradicating poverty so that no one is left behind.” G20 Ministers returned to this in March 2017 in Baden-Baden noting that: “We reiterate our determination to use all policy tools––monetary, fiscal and structural––individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth, while enhancing economic and financial resilience.”

Economic growth and inequality, the two sides of inclusion, have a complex nexus that can generate tradeoffs. Growth is the basis for generating inclusion. Across countries, growth has been instrumental in narrowing income gaps; within countries, growth has reduced poverty and made possible higher living standards and job opportunities. But policies driven by an exclusive growth focus can also set back inclusion in certain circumstances. While some inequality is integral to a market economy, high and persistent inequality can undermine the sustainability of growth itself.”

Continue reading here.

A new IMF report finds:

“Vietnam is highly affected by climate change. Its long coastline, geographic location, and diverse topography and climates contribute to Vietnam being one of the most hazard-prone countries in the Asia-Pacific region. Given the high concentration of the population and economic assets in coastal lowlands and the significant role played by agriculture and fisheries in the economy, Vietnam is ranked among the five countries likely to be most affected by climate change. Over the last 50 years, temperatures have increased twice as fast as the global average, the sea level has risen by 20 centimeters and the frequency and intensity of extreme weather events (drought, flood, salinization) have risen sharply. Natural disasters result in 470 fatalities and cost 0.8 percent of GDP (annual average between 1990 and 2016).

Climate risks pose immense challenges. Based on the authorities’ climate change scenarios, by the end of the century, sea levels are expected to rise by up to a meter. Sea waters would then cover 40 percent of the Mekong Delta area (where half of the country’s rice is produced), 3 percent of coastal provinces and 20 percent of Ho Chi Minh City, impacting directly 10–12 percent of the population and reducing GDP by 10 percent. The sectors most affected will be agriculture, aquaculture, energy transportation and tourism.”

Continue reading here.

IMF’s latest report on Lithuania says that: “Housing price developments in Lithuania are not an immediate concern, but the Bank of Lithuania rightly keeps an eye on possible overheating and froth in certain market segments. Macroprudential tools are in place to step in if needed. The strength of some small non-systemic financial institutions needs continued attention and credit union reform should be completed in line with current plans.”

From a new IMF paper on: Are House Prices Overvalued in Norway? – A Cross-Country Analysis:

 

 

“High and overvalued house prices are a source of vulnerability in Norway, in view of the importance of the housing market to both financial and macroeconomic stability. A large correction of house prices, driven by slower real income growth, a reverse in sentiment, or interest rate hikes could weaken household balance sheets and depress private demand, and in turn adversely affect corporate and bank earnings. The authorities have been vigilant about the risks and have implemented a list of measures to strengthen the resilience of banks and households, including additional bank capital buffer requirements in line with Basel III/CRD IV, higher risk weights on residential mortgages using IRB models, tighter mortgage regulations, and the introduction of the debt-to-income limit of five times the borrower’s gross annual income to complement the loan-to-value (LTV) limits and affordability tests. Nevertheless, further targeted macroprudential measures should be considered to help contain systemic risks if vulnerabilities in the housing sector intensify, including: tighter LTV limits, a reduction in banks’ scope for deviating from mortgage regulations, and/or higher mortgage risk weights.

In the longer term, the macro-financial resilience of the economy to housing market shocks should be enhanced through tax reform and structural measures. A stable housing market (without pronounced boom-bust cycles) would contribute to smoother economic development. While macroprudential measures play an important role in containing the buildup of financial imbalances, a holistic approach is needed to fundamentally address the issue: (i) reducing the generous tax preferences for housing investment would help prevent demand distortions and excessive leverage, thereby dampening housing cycles; (ii) while the recent streamlining of building codes―which shortened the time needed to obtain a building permit and finish construction—is welcome, relaxing land-use and remaining constraints on new property construction, including at the municipal level, should facilitate a more efficient use of land and a flexible adjustment of housing supply, which will mitigate house price growth; and (iii) a more developed rental market would help relieve demand pressures—especially in view of the recent large influx of asylum seekers―as well as support labor mobility across regions as the economy goes through structural change.”