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United Kingdom: Selected Issues

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  • International Monetary Fund

Abstract

This Selected Issues paper focuses on the housing and business cycles in the United Kingdom. The UK housing cycle is highly volatile as a result of tight housing supply constraints and fluctuations in credit conditions. Housing supply-side constraints can be alleviated through changes to the planning system and tax reforms. The new National Planning Policy Framework introduced by the government is creating the incentives for local councils to increase available land for construction. There are early signs that this change in the planning system is contributing to the recovery in housing construction. Targeted macroprudential policies could address financial stability risks stemming from the housing market. Although mortgage credit as a share of gross domestic product has been declining in the current housing recovery, there are signs that there is a build-up of financial risks: loan-to-income ratios are increasing in London and among first time buyers.

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  • International Monetary Fund, 2014. "United Kingdom: Selected Issues," IMF Staff Country Reports 2014/234, International Monetary Fund.
    • Handle: RePEc:imf:imfscr:2014/234
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    Cited by:

    1. Akinci, Ozge & Olmstead-Rumsey, Jane, 2018. "How effective are macroprudential policies? An empirical investigation," Journal of Financial Intermediation, Elsevier, vol. 33(C), pages 33-57.
    2. Gustafsson, Peter & Stockhammar, Pär & Österholm, Pär, 2016. "Macroeconomic effects of a decline in housing prices in Sweden," Journal of Policy Modeling, Elsevier, vol. 38(2), pages 242-255.
    3. Zulkhibri, Muhamed & Naiya, Ismaeel, 2016. "Assessment of Macroprudential Policy in a Dual Banking Sector," Working Papers 2016-2, The Islamic Research and Teaching Institute (IRTI).
    4. International Monetary Fund, 2016. "United Kingdom: Selected Issues," IMF Staff Country Reports 2016/058, International Monetary Fund.

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