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The Housing Cycle in Emerging Middle Eastern Economies and its Macroeconomic Policy Implications

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  • Samya Beidas-Strom
  • Weicheng Lian
  • Ashwaq Maseeh
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    Abstract

    This paper examines housing finance and housing price dynamics in selected emerging Middle Eastern economies over the past two decades. It finds that (i) mortgage markets have experienced rapid development, which has led to lower private per capita consumer spending volatility this decade; (ii) a downward price correction occurred in the housing market after 2007, which appears to have bottomed out; (iii) the rental market appears to be largely determined by region-specific economic fundamentals-a youthful working-age population and wealth variables; and (iv) a segregation between self-owned house and rental price dynamics exists in this region, rendering the former more sensitive to the business cycle.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/288.

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    Length: 29
    Date of creation: 01 Dec 2009
    Date of revision:
    Handle: RePEc:imf:imfwpa:09/288

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    Related research

    Keywords: Economic models; Emerging markets; Household credit; Housing prices; Middle East and Central Asia; Price increases; Real estate prices; mortgage; housing finance; real estate; mortgage market; mortgage markets; mortgage debt; mortgage lending; homeownership; mortgage financing; mortgage loans; real estate research; mortgage credit; mortgage products; property rights; leasehold; housing policies; mortgage finance; housing markets; real estate markets; housing supply; islamic mortgage; land sales; mortgage rate; housing policy; foreclosures; mortgage law; mortgages; mortgage lenders; residential mortgage; foreclosure; housing loans; home loans; residential real estate; residential mortgages; real estate industry; housing economics; mortgage loan; mortgage interest; real estate price; mortgage instruments; primary mortgage markets; real estate market; mortgage rates; mortgage bank; home ownership; real estate developments; second mortgages; traditional mortgage; land titling; secondary mortgage; secondary mortgage markets; housing finance systems; mortgage securities; commercial real estate; access to mortgage; housing loan; housing loan interest rate;

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    References

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    1. Karl E. Case & Robert J. Shiller, 1988. "The Efficiency of the Market for Single-Family Homes," NBER Working Papers 2506, National Bureau of Economic Research, Inc.
    2. A. Senhadji Semlali & Charles Collyns, 2002. "Lending Booms, Real Estate Bubbles and the Asian Crisis," IMF Working Papers 02/20, International Monetary Fund.
    3. Sven Rady, 2001. "Housing Market Dynamics: on the Contribution of Income Shocks and Credit Constraints," FMG Discussion Papers dp375, Financial Markets Group.
    4. Orazio Attanasio & Laura Blow & Robert Hamilton & Andrew Leicester, 2005. "Consumption, house prices and expectations," Bank of England working papers 271, Bank of England.
    5. Bordo, Michael D & Jeanne, Olivier, 2002. "Boom-Busts in Asset Prices, Economic Instability and Monetary Policy," CEPR Discussion Papers 3398, C.E.P.R. Discussion Papers.
    6. Paul Louis Ceriel Hilbers & Angana Banerji & Haiyan Shi & Alexander W. Hoffmaister, 2008. "House Price Developments in Europe," IMF Working Papers 08/211, International Monetary Fund.
    7. Robert J. Shiller, 2007. "Understanding Recent Trends in House Prices and Home Ownership," NBER Working Papers 13553, National Bureau of Economic Research, Inc.
    8. Richard K. Green & Susan M. Wachter, 2007. "The housing finance revolution," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 21-67.
    9. Miles, David, 1992. "Housing markets, consumption and financial liberalisation in the major economies," European Economic Review, Elsevier, vol. 36(5), pages 1093-1127, June.
    10. Robert J. Shiller, 2002. "From Efficient Market Theory to Behavioral Finance," Cowles Foundation Discussion Papers 1385, Cowles Foundation for Research in Economics, Yale University.
    11. John B. Taylor, 2007. "Housing and Monetary Policy," NBER Working Papers 13682, National Bureau of Economic Research, Inc.
    12. Calza, Alessandro & Monacelli, Tommaso & Stracca, Livio, 2006. "Mortgage markets, collateral constraints, and monetary policy: Do institutional factors matter?," CFS Working Paper Series 2007/10, Center for Financial Studies (CFS).
    13. Englund, P. & Ioannides, Y.M., 1996. "House Price Dynamics: An International Empirical Perspective," Papers 1996-01, Uppsala - Working Paper Series.
    14. Aoki, Kosuke & Proudman, James & Vlieghe, Gertjan, 2004. "House prices, consumption, and monetary policy: a financial accelerator approach," Journal of Financial Intermediation, Elsevier, vol. 13(4), pages 414-435, October.
    15. Andreas Billmeier & Isabella Massa, 2007. "What Drives Stock Market Development in the Middle East and Central Asia," IMF Working Papers 07/157, International Monetary Fund.
    16. Konstantin A. Kholodilin & Jan-Oliver Menz & Boriss Siliverstovs, 2007. "What Drives Housing Prices Down?: Evidence from an International Panel," Discussion Papers of DIW Berlin 758, DIW Berlin, German Institute for Economic Research.
    17. Karen E. Dynan & Douglas W. Elmendorf & Daniel E. Sichel, 2005. "Can financial innovation help to explain the reduced volatility of economic activity?," Finance and Economics Discussion Series 2005-54, Board of Governors of the Federal Reserve System (U.S.).
    18. Jonas D. M. Fisher, 2007. "Why Does Household Investment Lead Business Investment over the Business Cycle?," Journal of Political Economy, University of Chicago Press, vol. 115, pages 141-168.
    19. Fran�ois Ortalo-Magné & Sven Rady, 2006. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints ," Review of Economic Studies, Oxford University Press, vol. 73(2), pages 459-485.
    20. Calvin Schnure, 2005. "Boom-Bust Cycles in Housing," IMF Working Papers 05/200, International Monetary Fund.
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    Cited by:
    1. Antje Hildebrandt & Duy T. Huynh-Olesen & Katharina Steiner & Karin Wagner, 2013. "Residential Property Prices in Central, Eastern and Southeastern European Countries," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 52-76.
    2. Ambrogio Cesa-Bianchi, 2012. "Housing Cycles and Macroeconomic Fluctuations: A Global Perspective," IDB Publications 77379, Inter-American Development Bank.
    3. repec:onb:oenbwp:y:2013:i:2:b:1 is not listed on IDEAS

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