IMF Conference

The paper and presentation take stock of recent developments in Asian housing markets. In many advanced economies, low interest rates and large government support during the COVID era fueled fast housing price growth, which has increased housing price misalignment, reduced affordability, and raised the threat of a correction in housing prices going forward (house price-at-risk), especially as interest rates rise. By contrast, emerging Asia has experienced more limited price increases, though housing quality remains of concern in a number of Asian EMs. A multifaceted policy approach is needed to address these challenges. Asian countries have built a broad macroprudential toolkit, which can be effective in reducing housing market risks in Asia. Empirical analysis shows that demand-side measures, such as loan-to-value (LTV) ratio and debt-service-to-income (DSTI) ratio limits, have been more effective than capital-based tools, and the effect of policy tightening during upswings has been much stronger than stimulatory effects of policy loosening during downturns. While macroprudential measures have been effective at targeting household credit growth, they only have a limited effect on housing prices per se. As for affordability, structural supply side measures, targeted demand side measures, and innovative financing mechanisms can play a crucial role.

Following the presentation, there will be an opportunity for Q&As.