DM housing: Lots of monitoring, no real brakes
The restraint to the DM housing sector does not look as though it will come from financial policy (or a financial accident), but from (further) rising costs and prices eventually undermining affordability. The most that central banks are generally doing is ‘monitoring’ the situation.
The much-asked question is whether (and when) housing is riding for a fall. Financial factors do not seem likely to act as much of a brake any time soon.
Lending conditions will remain very supportive and policy makers have both a limited willingness and ability to impose macroprudential measures sufficient to temper demand suddenly. The excesses of the last housing expansion in many countries have led to far more cautious behavior in this boom, making it less likely that housing will weaken because of a financial panic (a problem elsewhere might channel flows towards housing, as in the early 2000s). This makes it all the more likely that it will be diminishing affordability (high prices relative to incomes) that will eventually choke off the boom.
