9/01/2014 – El Mundo
In its “Multi-Country Report”, the International Monetary Fund (IMF) indicates that housing prices seem to be reaching the rock bottom level in Denmark, Ireland, the Netherlands and Spain, the four countries which have had experienced significant house-price falls in recent years.
The report reminds that the four analyzed countries share similar monetary policy. It also remarks that the most acute price slumps were seen in Spain and Ireland, which additonally suffer high unemployment rates. The IMF staff assignes this fact to a huge loss of jobs in the home-building industry.
Fall in prices had an impact on consumption. Household debt has had increased during the real estate boom (these countries saw sudden property prices upsurge in years 2000-2007 due to easy access to financing) and housing equity has had shrunk during the recession, the IMF reports. What is more, both residential and non-residential investment did not escape the hit. In turn, financial institutions restricted their loan-eligibility conditions.
According to the Fund, the four analyzed countries should address the real estate sector in the context of reactivation and reduction of the impact of the crisis. To achieve that, they are advised to focus on macro-economic policies, rental market, undertake tax reforms for pensions to fight liquidation gap and adopt measures which would help to make the mortgage debt healthier.
“It is essential to guarantee that the mispolicy which has led to the real estate bubble will gradually vanish”, the report concludes.
Original story: El Mundo (by Pablo Ramos)
Translation: AURA REE