Breakingviews

U.S. housing demand is building

December 26, 2014

The post-crisis rebound boosted home prices 25 pct even as sales and construction lagged. Increasing household formation, job creation and easing credit look set to give the market another leg up, despite rising interest rates and the headwind of sliding affordability.

Remember the UK housing bubble?

November 26, 2014

Not long ago an overheating housing market was seen by many as the big UK danger. Now mortgage approvals are dropping and house inflation is easing – even though mortgages are getting cheaper. Tighter home-loan regulation is a factor. Workers’ low earnings are the main restraint.

France’s housing slump is sign of deeper woes

August 26, 2014

House prices are falling and Paris is a buyer’s market. Hollande’s clumsy policies and lower interest rates should have the opposite effect. But the seriousness of the slowdown incites households and companies to hoard cash. Only shock therapy can end the death spiral.

London real estate at an inflection point

July 17, 2014

Property values in the UK capital are up 20 pct in a year. But leading indicators – buyer enquiries, new mortgages and volumes – have stalled. For prices to hold, foreign buyers will have to spend more in spite of a stronger pound and punitive taxation.

U.S. home affordability on way to lowest in years

June 18, 2014

With the Fed set to raise rates, house prices rising and incomes not keeping pace, the dream of home ownership – cheaper after the 2008 downturn – is receding again for many. A new Breakingviews calculator shows that by 2017 homebuyers may have to stretch the most in decades.

Review: “House of Debt” diagnosis beats remedies

June 13, 2014

Atif Mian and Amir Sufi make a compelling case that excess consumer debt caused the U.S. Great Recession’s severity, but their mortgage bailout proposal would make matters worse. Their shared value mortgages might help, but old-fashioned tight money is a simpler and better way.

UK housing bounce obscures a credit-lite recovery

June 3, 2014

Fears of a finance-driven binge are misplaced. Mortgage lending is low and the government’s foolish Help to Buy scheme is small. Lending to corporates is falling. The UK has little credit, arguably too much foreign capital, and weak exports. Sustainability is in question.

Berlin’s housing boom has lessons for London

March 25, 2014

The German central bank says Berlin’s property prices have risen 25 pct above fair value. But this mini-bubble is unlikely to expand to London proportions. Lending standards make speculation expensive, building is increasing sharply and the Bundesbank is on the case.

UK budget must deliver homes not bubbles

November 28, 2013

George Osborne can boast that the UK economy is growing and the deficit is diminishing. But the recovery is too typically reliant on house price inflation. The chancellor’s budget update should aim for radical change: getting finance to work for house building, not house bubbles.

UK’s Help to Buy scheme is a no-brainer for banks

October 3, 2013

Sure, the government’s mortgage guarantee scheme could backfire on banks’ reputations if overstretched borrowers lose their homes and taxpayers wind up paying the bill. But capital benefits and the need to defend market share look like compelling reasons for banks to sign up.