Khalid ElFayoumi, Ms. Izabela Karpowicz, Ms. Jenny Lee, Ms. Marina Marinkov, Ms. Aiko Mineshima, Jorge Salas, Andreas Tudyka, and Ms. Andrea Schaechter
Many European economies have faced pressure from rental housing affordability that has widened social and economic divergence. While significant country and regional differences exist, this departmental paper finds that in many advanced European economies a large and rising share of low-income renters, the young, and those living in cities is overburdened. In several locations, middle-income groups also increasingly face rental affordability issues.
, demand-side measures such as property-related taxes were enacted to target housing affordabilityissues. For instance, buyer stamp duties, speculation and vacancy taxes were implemented by the provincial governments in British Columbia and Ontario in 2016–18.
As monetary and macroprudential policy tightens, mortgage financing becomes more expensive which could exacerbate household vulnerabilities, considering the sensitivity of household debt service to interest rates ( Figure 1.5 , 1.6 ). In Canada, most mortgages have a contractual maturity of five years, which
the low-income renters at subsidized rates pay on rent is nearly half (about 22 percent) compared to those in the same income bracket and paying market rent ( Figure 8 ). Nevertheless, nearly one-fifth of all low-income renters with subsidized rents are overburdened ( OECD 2020b ). The share is particularly high in Finland and the United Kingdom ( Figure 8 ), as well as in Iceland, Luxembourg, and Switzerland ( OECD 2020c ). 3 Some countries with severe rental affordabilityissues provide limited subsidized renting, for example, Greece and Spain.
narrowing the exemptions to the envisaged new borrower-based macroprudential measures and ensure that fiscal incentives do not amplify house price cycles. Address affordabilityissues for vulnerable households.
Fiscal policy . Continue with prudent medium-term fiscal balance excluding proceeds from the individual investor program (IIP). Shift the balance of expenditure towards infrastructure. Further strengthen revenue collection and broaden the tax base. Improve public investment management and risk analysis.
Structural reforms . Promote strong and inclusive growth
International Monetary Fund. Western Hemisphere Dept.
, and sustainable growth. The consultation assessed the growth and risk outlook; policies and reforms to sustain the recent recovery and raise long-term potential growth; the implications of the U.S. tax reform for Canada; housing market imbalances and affordabilityissues; and policies to strengthen financial system resilience as household and corporate debt climbed to historic highs.
Key Policy Messages :
The current favorable economic environment presents an opportunity to rebuild policy buffers, and forge ahead with structural reforms to boost Canada’s global
of low-income renters, the young, and those living in cities is overburdened. In several locations, middle-income groups also increasingly face rental affordabilityissues. These groups have experienced particularly slow income growth amid rising rental prices. Disparities between renters and homeowners have widened over the past decade in an environment of low interest rates and housing policies that tend to be regressive and favor home ownership. Rental housing support for the segment of tenants most in need has often not kept pace with affordability pressures
International Monetary Fund. Asia and Pacific Dept
and deploy appropriate measures based on evolving macroeconomic and financial stability risks facing Macao SAR.
Property prices continued to face upward pressures in 2018, rising by 7.5 percent. To alleviate the housing affordabilityissue for the youth, the maximum loan-to-value ratio of mortgages granted to Macao young first-time homebuyers was relaxed to assist young adults in purchasing their first homes in February 2018. Subsequently, the proportion of local first-time homebuyers rose notably to 82.1 percent in 2018, from 45.0 percent in 2017.
On the supply