Tag Archives: House prices

Will there really be a pensions spending spree?

Philip Bunn and Alice Pugh

UK prepares for pensions spending spree” “House prices set to soar by 30 per cent as savers raid pension funds” These were some of the headlines which followed the pension reforms announced by the UK government in the 2014 and 2015 Budgets.  But how much truth do they contain?  In contrast to some of the headlines, results from a household survey commissioned by the Bank suggest that greater pension freedom will have only a small impact on household spending.  And – although a number households would like to invest funds withdrawn from their pension in property – only a subset of these are likely to be able to afford to do so, and some may have bought property even without the reforms.

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Filed under Macroeconomics, Monetary Policy

Will a Fed rate hike affect house prices in emerging markets?

Ambrogio Cesa-Bianchi and Alessandro Rebucci

In some parts of the emerging world, housing markets have grown well ahead of income in recent years.  Will a US monetary policy normalisation bring about a correction in house prices as the search for yield unwinds and capital flows back to the US?  Looking at the past through the prism of a structural VAR, we think the answer is “yes it will”.  Shocks to global liquidity have much larger effects on house prices in emerging markets than in advanced world economies. A tightening in global liquidity conditions also leads to a rapid capital account reversal, exchange rate depreciation and hence a sharp fall in consumption.

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Filed under International Economics, Macroeconomics, Macroprudential Regulation, Monetary Policy