{
  "title": "House Prices and Macroprudential Policies: Evidence from City-level Data in India",
  "publication": "IMF Working Papers, December 18, 2020",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2020/12/18/house-prices-and-macroprudential-policies-evidence-from-city-level-data-in-india-49622",
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  "summary": "This paper examines the efficacy of macroprudential policies in addressing housing prices in a developing country while underscoring the importance of fundamental factors.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- This paper examines the efficacy of macroprudential policies in addressing housing prices in a developing country while underscoring the importance of fundamental factors.\n- Estimated models using city-level data for India suggest a strong influence of fundamental factors in driving housing prices.\n- There is compelling evidence of the effectiveness of macroprudential tools — Loan-to-value (LTV) ratio, risk weights, and provisioning requirements — in influencing housing price movements.\n- A granular analysis indicates an even stronger impact on housing prices of a change in the regulatory LTV ratio for large-sized vis-à-vis small-sized mortgages, which buttresses their potency in fighting house price speculations.\n- Tightening of the risk weights on the housing assets of banks causes significant downward pressure on house prices.\n- Regulatory changes in standard asset provisioning on housing loans also influence house prices."
    },
    {
      "heading": "Key Findings",
      "content": "- Fundamental factors are a strong driver of city-level housing prices in India.\n- Macroprudential tools with demonstrated influence on housing prices:\n  - Loan-to-value (LTV) ratio.\n  - Risk weights on housing assets.\n  - Provisioning requirements (standard asset provisioning on housing loans).\n- Differential effects by mortgage size:\n  - Changes in the regulatory LTV ratio have a stronger impact on large-sized mortgages than on small-sized mortgages.\n- Bank regulatory tightening (higher risk weights) exerts significant downward pressure on house prices."
    },
    {
      "heading": "Policy implications (as conveyed by the paper)",
      "content": "- Macroprudential instruments (LTV limits, risk weights, provisioning) can be effective tools to temper housing price growth and curb speculation, particularly through targeted measures affecting large-sized mortgages.\n- Adjusting bank-level regulatory parameters (risk weights, provisioning) is a channel through which authorities can influence aggregate housing price dynamics.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2020/12/18/house-prices-and-macroprudential-policies-evidence-from-city-level-data-in-india-49622"
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    "Authors: Bhupal Singh",
    "Published: December 18, 2020",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513552514.001",
    "This paper examines the efficacy of macroprudential policies in addressing housing prices in a developing country while underscoring the importance of fundamental factors.",
    "Estimated models using city-level data for India suggest a strong influence of fundamental factors in driving housing prices.",
    "There is compelling evidence of the effectiveness of macroprudential tools — Loan-to-value (LTV) ratio, risk weights, and provisioning requirements — in influencing housing price movements.",
    "A granular analysis indicates an even stronger impact on housing prices of a change in the regulatory LTV ratio for large-sized vis-à-vis small-sized mortgages, which buttresses their potency in fighting house price speculations.",
    "Tightening of the risk weights on the housing assets of banks causes significant downward pressure on house prices.",
    "Regulatory changes in standard asset provisioning on housing loans also influence house prices.",
    "Fundamental factors are a strong driver of city-level housing prices in India.",
    "Macroprudential tools with demonstrated influence on housing prices:",
    "Differential effects by mortgage size:",
    "Bank regulatory tightening (higher risk weights) exerts significant downward pressure on house prices.",
    "Macroprudential instruments (LTV limits, risk weights, provisioning) can be effective tools to temper housing price growth and curb speculation, particularly through targeted measures affecting large-sized mortgages.",
    "Adjusting bank-level regulatory parameters (risk weights, provisioning) is a channel through which authorities can influence aggregate housing price dynamics.",
    "**Working Paper**"
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