Posted on December 10, 2014 by iMFdirect
By Min Zhu
(Versions in 中文)
For the past decade, house prices have steadily increased in the vast majority of the 30 countries that make up the IMF’s House Price Index for Emerging Markets released today at a conference organized by the IMF and the Indian Institute of Management in Bangalore, India (Figure 1).
The index shows a lull in the aftermath of the global financial crisis, followed by an increase for nine consecutive quarters since 2012. This run-up—four times as fast as that in advanced economies—would be even more pronounced if the larger countries in the group such as China and India receive greater weight in the index.
Filed under: Advanced Economies, Asia, Economic outlook, Economic research, Emerging Markets, Financial Crisis, growth, IMF, International Monetary Fund, Investment | Tagged: China, credit, emerging market, Global House Price Index, house prices, housing market, India, macroprudential policies, Microprudential regulations, Min Zhu, monetary policy, public-private partnerships | Leave a comment »
Posted on July 28, 2014 by iMFdirect
By Ruy Lama
House prices are rising rapidly in the UK at an annual rate of 10.5 percent. House price inflation is particularly high in London (20 percent per year), and it is gradually accelerating in the rest of the country. The recent increases in house prices have been getting a lot of attention, and understandably have raised questions about living standards and whether another “boom-bust” cycle has begun.
The current UK housing cycle raises two important questions. What is driving the rise in house prices? And how should macroeconomic policies respond?
Macroeconomic policies should tackle two crucial issues in the housing market: (i) mitigating systemic financial risks during upswings in house prices and leverage; and (ii) encouraging an adequate supply of housing in order to safeguard affordability. In this blog, we discuss how the UK authorities are addressing these two issues and what additional policies may be necessary to manage risks from the housing market.
Filed under: Advanced Economies, Economic outlook, Economic research, Employment, Europe, Financial Crisis, growth, IMF, International Monetary Fund, Investment | Tagged: Article IV, house prices, housing market, inflation, Loan-to-income ratio, loan-to-value ratio, Macroeconomic policies, mortgages, United Kingdom | Leave a comment »
Posted on June 11, 2014 by iMFdirect
By Min Zhu
(Versions in عربي, Español, 日本語, 中文, Français, and Русский)
House prices are inching up. But is this a cause for much cheer? Or are we watching the same movie again? Recall how after a decade-long boom, house prices started to fall in 2006, first in the United States and then elsewhere, contributing to the 2008-9 global financial crisis. In fact, our research indicates that boom-bust patterns in house prices preceded more than two-thirds of the recent 50 systemic banking crises.
While a recovery in the housing market (Figure 1) is surely a welcome development, we need to guard against another unsustainable boom. Housing is an essential sector of every country’s economy and has systemic implications, which is why we at the IMF are focusing on it not only in individual countries but on a cross-country basis.
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Financial Crisis, growth, IMF, International Monetary Fund, Investment | Tagged: Article IV, Australia, Belgium, Canada, Estonia, Global House Price Index, Hong Kong, house prices, housing market, income, Ireland, Korea, macroprudential policies, Min Zhu, Norway, Peru, Spain, Sweden, Thailand | Leave a comment »
Posted on August 1, 2013 by iMFdirect
By Jarkko Turunen
(Version in Español)
A year ago, we were very concerned about lingering weakness in the U.S. housing market, which we saw as a major obstacle to the economic recovery.
But what a difference a year makes! As our latest report on the U.S. economy points out, the housing market recovery has been stronger than expected, and is providing a significant boost to private domestic demand and economic growth.
What has changed in the last 12 months? House prices have rebounded sharply and are currently about 7-12 percent above their level a year ago. Home sales increased by more than 15 percent over the same time period. Thanks to higher house prices and the positive effects of government housing finance programs, fewer homeowners are “underwater” (owe more on their mortgages than their houses are worth) or are behind on their mortgage payments, and fewer houses are entering foreclosure.
Filed under: Advanced Economies, Economic Crisis, Economic research, Employment, Finance, growth, IMF, International Monetary Fund, Investment, Public debt | Tagged: economic growth, Federal Reserve, house prices, housing, housing indicators, housing market, IMF, iMFdirect, International Monetary Fund, monetary policy, mortgages, U.S., United States | Leave a comment »
Posted on May 10, 2012 by iMFdirect
By Luis Cubeddu, Camilo E. Tovar, and Evridiki Tsounta
(Version in Español)
Housing construction projects are sprouting up across much of Latin America and mortgage credit is also growing very fast. Does this sound familiar? It should!
Easy external financing conditions and high commodity prices have led to important improvements in living standards and credit deepening in many countries of the region over the past decade. The credit expansion has been particularly impressive in the mortgage sector, where legal reforms and government subsidies have also played a role.
Although mortgage credit in Latin American countries is relatively low by international standards —at just 7 percent of GDP versus over 20 percent in emerging Asia and over 65 percent in the United States—it has grown at an impressive annual average real rate of 14 percent since 2003, with Brazil leading the pack. Home prices have also risen sharply over this period, particularly in countries where mortgage credit has expanded the fastest (for more details see Chapter 5 in our latest Western Hemisphere Regional Economic Outlook).
So, are housing vulnerabilities emerging?
Filed under: Economic Crisis, Economic outlook, Economic research, Employment, Finance, Financial Crisis, Financial regulation, growth, Inequality, International Monetary Fund, Latin America, Public debt | Tagged: Brazil, Camilo E. Tovar, Chile, Colombia, credit, Evridiki Tsounta, housing, housing market, Luis Cubeddu, Mexico, Minha Casa, Minha Vida, Peru, Uruguay | 5 Comments »
Posted on November 11, 2011 by iMFdirect
By Evridiki Tsounta
(Version in Español)
If housing and labor market woes aren’t bad enough in the United States, they’re hurting Central America and the Caribbean too.
It has been five years since the U.S. housing bubble burst and three years since the onset of the global financial crisis. And still, in the world’s largest economy—which in the past quickly and vigorously recovered from downturns—jobs and output are barely growing. In fact, output is just 1.6 percent higher than a year ago, and almost 14 million people remain unemployed.
True, some of this lackluster economic performance reflects global factors, particularly the uncertainty surrounding the lingering European crisis, but also temporary factors related to the Japanese earthquake. However, on the domestic front, fragile household balance sheets and stubbornly high unemployment have been major factors impeding growth. This latter development is having negative spillovers on many Central American and Caribbean countries, where remittances and tourism flows from workers in the United States are important for their economies (see our most recent Regional Economic Outlook for Western Hemisphere).
Filed under: Employment, growth, International Monetary Fund, Latin America | Tagged: economic growth, export diversification, homeowners, housing market, IMF, iMFdirect, International Monetary Fund, labor market, mortgage refinance, Regional Economic Outlook: Western Hemisphere, remittances, unemployment, unemployment rate | 2 Comments »
Posted on August 1, 2011 by iMFdirect
By Ajai Chopra
The U.K. government should be nimble in its policy response if it looks as though the economy is headed for a prolonged period of weak growth, high unemployment, and subdued inflation. Currently, we don’t expect this scenario to happen. But if such a scenario appears to be in prospect, we recommend responding quickly with some combination of further quantitative easing by the Bank of England and temporary tax cuts.
The most likely scenario for the U.K. economy is that it will gradually recover, although it will face continued headwinds from a soft housing market, household and financial sector deleveraging, and ongoing consolidation of the budget. Against this, the economy should get a push from private investment and an increase in exports driven by the global recovery. Labor productivity may also rebound and improve competitiveness.
Led by these forces, the IMF is expecting a bumpy and uneven recovery in the U.K. and our updated growth forecast for the near term, taking into account the recent GDP release for the second quarter, will be published with the September World Economic Outlook. Over the medium term, we expect growth to accelerate gradually to about 2½ percent. Continue reading
Filed under: Advanced Economies, Europe, Fiscal policy, Fiscal Stimulus | Tagged: commodiity prices, competitiveness, exports, fiscal adjustment, housing market, inflation, quantitative easing, tax cuts, unemployment | 8 Comments »