The report states, "While a recovery in the housing market 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. But the task is difficult for a couple of reasons. First, assessing when house prices are out of line with economic fundamentals is as much art as science. Second, the policy toolkit to manage housing cycles is still under construction."
The IMF figures show that home prices in
The report adds, "The evidence on house price-to-rent and house price-to-income ratios, however, provides only a broad indication of housing market valuations. Judgments about housing valuation also require supplementary information, such as credit growth, household indebtedness, lender characteristics, and the method of financing."
The IMF found that rent prices are 10% above their historical average placing
Senior IMF executives stress a dilemma over monetary policy including interest rate policy, which is being faced by
The report recommends that central banks must give more weight in their considerations over interest rate policy.
(c)2014 the Globes (Tel Aviv, Israel)
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