the Economists of the IMF emphasise that it is not yet time to panic, but to strengthen surveillance over prices. Portugal has registered the 15.Th biggest annual rise in more than 60 countries analyzed
The real estate prices in many countries are rising rapidly to pre-crisis levels, warns a study by economists of the International Monetary Fund (IMF) released this week. The time is not yet panic but it is time to tighten the surveillance, ask for it.
“Between 2007-08, the real estate prices collapsed, marking the beginning of the crisis. Now, the house price index from the IMF shows that we are almost back to prices pre-crisis”, pointing Hites Ahir and Prakash Loungani of the IMF. “It’s time again to worry about it?”
the analysis of the prices and the conditions of the market of dozens of countries, the answer is that the time has come to tighten surveillance to prevent the error to find “that this time is different”. And explain why it is not yet time to panic: the evolution of the prices is not occurring in a synchronized manner in all the countries and cities, unlike pre-crisis, and today there is already some regulation to counter these “bubbles”.
The economists examined recent developments in 57 countries and has identified three behaviors: in 18 countries, the prices have dropped with the crisis, and so persist; in the second category, also with 18 countries, the prices collapsed and up to now in a significant way. Finally, in 21 countries, the prices have dropped a little and revalorizaram soon.
The study puts Portugal in the second category, the so-called bust and boom, as after a sharp fall in the prices again have significant improvements from 2013. According to the advanced data, the real estate in Portugal have appreciated 6.4% in the last year, the 15.º record the highest of the countries examined (to the side). This evolution arises in spite of the credit squeeze in Portugal, and nearly freezing of the average earnings in the country, stress.
But the lack of credit in countries such as Portugal is another reason for the leaders of the IMF recommended that “surveillance”. “Many of the booms in real estate have been fuelled by excess credit growth.” This time, the detonator is another, the lack of supply. “The permits for new housing grew only modestly (…) and the impact of the limitations of the offer is evident in various cities,” they say. This is no better, nor worse, it is different: “Even if prices rise only due to the offer, the impact on the households’ indebtedness could be adverse to financial stability.” Is that the rise in prices does not find the corresponding us household income, that, with the entry of foreign investors to pull prices eventually will be forced to a greater effort (risk) to buy or rent housing – many investors are taking refuge in real estate in a phase of reduced profitability in various assets.
Other alerts: the ECB and the SECURITIES
The analysis of the economists of the IMF comes after the last week also the Council of the European Systemic Risk board (ESRB) have pointed to the batteries to the real estate market. The ESRB has issued alerts to the eight countries of the euro by identify in the same “vulnerabilities in the real estate sector in the medium term” is likely to cause a systemic impact on the stability of the region.
Also the ex-chairman of the CMVM, Carlos Tavares, has warned recently to the excessive appreciation of the real estate. “Other markets, that in the pre-2007 had escaped to the bubbles in real estate (…), today have behavior of prices, which hardly may no longer be classified as “bubbles,””, cautioned in October.
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