INTERNATIONAL CONFERENCE ON A NEW PARADIGM IN HOUSING POLICY December 12-13, 2001, Shilla Hotel Seoul, Republic of Korea REGULATING HOUSING MARKETS IN A NEW GLOBAL ERA: DO WE HAVE A FRAMEWORK? Bertrand RENAUD, Ph. D.
[email protected] Conference DRAFT subject to revision. Please do not quote 8 December 2011 INTERNATIONAL CONFERENCE ON A NEW PARADIGM IN HOUSING POLICY December 12-13, 2001, Shilla Hotel Seoul, Republic of Korea REGULATING HOUSING MARKETS IN A NEW GLOBAL ERA: DO WE HAVE A FRAMEWORK? 1 Bertrand RENAUD, Ph. D.
[email protected] [email protected] Conference DRAFT subject to revision. Please do not quote [Printed on: Thursday, December 08, 2011, 20:24. Version 7] “The challenge is to improve our understanding of the linkages between the financial sector and real activity” Donald Kohn, Vice-Chairman of the U.S. Federal Reserve, Speech, November 2008 1 INTRODUCTION 1.1 Challenge of regulating housing markets for stability and social access in a new era The global financial and economic crisis of 2007-09 (GFC) has ushered us into a new global economic, social, political and environmental era. Prior to the global financial crisis, in high income economies decades of financial liberalization and innovation had seen quickening waves of housing price cycles of increasing amplitude, especially in the U.S. that has been the dominant economy. (FIGURE 1). We expect that many national housing systems will now perform differently from the way they did during the Great Moderation and the great liquidity boom that fed the global housing boom.2 National policy makers are confronted collectively with the challenge of regulating housing markets to make them more robust and achieve two things simultaneously: on one hand prevent the recurrence of the large bubbles that triggered a systemic financial crisis in the US and several other Western economies, on the other hand insure that the housing system provides access to a socially acceptable level of housing services for all households across all forms of tenure: ownership, private rental and social rental.