The Unassuming Economist

“Housing prices growth have moderated amid a slowdown in mortgage credit”, according to the latest IMF report on Colombia. The report also notes that “Similarly, risks from weaker household balance sheets have risen marginally and remain contained. Risks from rising house prices are mitigated by low loan-to-value ratios (51.4 percent) and small mortgage portfolios of banks (12.3 percent of total loans).”

“With credit growth moderate, real housing prices some 30 percent below their 2008 peak, and low financial depth, there is no evidence of imminent financial risks emerging”, says IMF’s report on Lithuania.

“On the housing market and in light of ever rising housing prices, the authorities should explore the effectiveness of recent measures in containing risk and whether further macro-prudential measures such as limits to loan-to-value ratios in addition to those already taken in 2013 would be appropriate. (…) While some of the tax measures aim to increase housing supply, the envisaged tax relief for home buyers would aggravate existing imbalances given that demand for real estate structurally outstrips supply”, says the IMF’s latest report on Luxembourg.

“…while house prices increased for the first time in about 3 years”, according to the IMF’s latest report on Slovenia.

According to the IMF’s 2016 Article IV Consultation Concluding Statement of the Mission for United Kingdom:

Macroprudential policy will need to tighten later this year if housing and mortgage markets remain buoyant.

• Housing and mortgage markets decelerated somewhat between mid-2014 and mid-2015 following macroprudential tightening. More recently, however, house price growth rose to more than three times income growth, and the share of new mortgages at high loan-to-income (LTI) ratios is again rising.

• The recent increased activity may partly reflect a temporary rush to buy houses before higher transaction taxes on some home purchases took effect in April. However, if current housing and mortgage market trends persist, further macroprudential tightening (e.g., tighter LTI or loan-to-value limits) will be needed later this year to avoid financial stability risks that may arise from excessive household indebtedness.

• The buy-to-let market has grown rapidly in recent years. It should, like the owner-occupied market, be subject to macroprudential measures to mitigate financial stability risks following the now-concluded Treasury consultation on this matter.

• It will also be important to continue closely monitoring potential risks in the commercial real estate market, which saw rapid price growth during 2014-15 that has recently paused.