A weekend topic starting with Kyodo News. "Skyrocketing property prices in South Korea are leaving ordinary people struggling to find affordable housing, especially in the capital Seoul and surrounding areas. A survey showed that the price has come close to doubling during the four years since 2017. In South Korea, a new term called 'young-gul' has been coined to describe the position of buyers; it means to 'gather up everything you can, even your soul' to make the payment. Lee said she was a perfect example. 'I was lucky to be able to buy,' Lee said, although she ended up with a 140 million won mortgage while her annual salary is just 40 million won. Her husband, who is self-employed, has no fixed income."

"If interest rates, however, rise in the future and housing supply progresses as planned, there could be a glut in the market in a few years. A sense of caution that the bubble will burst and prices plummet is increasing day by day."

From Global News. "As Canada’s housing market shows tentative signs of homebuyers’ fatigue, some economists are looking ahead at another factor that’s widely expected to put a damper on the real estate frenzy: rising interest rates. Since home prices started heating up last summer, the housing sector has been a key propeller for the economy at a time when few other sectors were growing, apart from government spending. The housing market — including residential construction, home renovations, homeownership transfer costs and spending on furniture, as well as home maintenance and repairs — now makes up nearly 28 per cent of Canada’s GDP, Diana Petramala, senior economist at Ryerson University’s Centre for Urban Research and Land Development says quoting numbers from Statistics Canada."

"'If a bank got a new dollar … do they prefer lending that money out into the housing market or lending it out to business?' asks Jeremy Kronick, associate director of research at the C.D. Howe Institute. Before the pandemic, the answer tended to be that half would go to mortgage borrowers and half to businesses. Now, he says, 'all of it is to mortgage(s).'"

"This reflects, in part, built-in incentives that predate the pandemic. For example, mortgage default insurance, which is largely government-backed and mandatory in Canada for mortgages with a down payment of less than 20 per cent, means insured mortgages are, essentially, a 'risk-free loan for a bank,' he says."

"However, Canada needs to invest in businesses that can fuel the kind of growth that can lead to greater productivity, a key driver of rising living standards, he says. The housing sector, as important as it is for the economy and the labour market, is not 'a typically overly productivity-enhancing sector,' he says."

From WSAW. "Housing prices in Wisconsin doubled in a year’s time and buyers are still paying the prices. According to the Wisconsin Realtors Association, prices in places like Stevens Point, Wausau, and Wisconsin Rapids are starting to drop slightly, but Marshfield is keeping with the national trend upward. While interest rates could change and possibly impact buyers willingness to purchase, realtor Austin Solomon said 'I don’t think it’s a bubble.'"

The Florida Times Union. "'Do we see a $500,000 house going for $700,000, no. But we do see a $1 million listing going for $1.5 million. Yes, we do,' said Northeast Florida Association of Realtors President Missi Howell. Howell noted that, unlike 2005-2006, this buying frenzy does not represent a housing bubble, and no sudden crash is predicted."

"'There is nothing being said by experts in the industry about this being a bubble,' she said. 'Typically, when you have a bubble, there is speculative buying without reasoning. There is a buying frenzy with no substance behind it. In today’s market there are real people looking for housing, whether it is to live in themselves, to rent or for second-home purposes.'"

"'When a bubble happens you have an increase, then it bursts and then the decrease. That is not projected. What is projected is that the steep increase we have seen year over year since last year will probably not continue. It will become more of a plateau,' said Howell. 'Everything I am reading about our market is that this will probably continue until the end of the year and then stabilize in 2022. The market will eventually get to the point where it says it cannot bear much more in price increases. Buyers will get to the point they won’t pay much more because they are financing, or they are cash strapped.'"

The Irish Times. "The assumption – held by the same stakeholders and with the same surety – is that property prices can only go in one direction: up. We’re now betrothed to the narrative of ever-accelerating house price inflation: buyers scrambling to get on the ladder; foreign investment funds buying up stock."

"Estate agents talk of pent-up demand. The Central Bank says 'significant house price growth' will continue this year and next. 'One paradox of the pandemic is that, while job losses are at a scale never seen before, the strength of economic activity in unaffected sectors combined with the level of additional savings owing to a lack of spending opportunities, precautionary behaviour and direct fiscal support, mean that there is ample scope for a liquidity-driven growth in house prices coinciding with never-seen-before economic disruption in some sectors,' Central Bank governor Gabriel Makhlouf said last week."

"According to the Central Statistics Office, the average sales price for a property in Dublin in the 12 months to the end of April was €466,211, nine times the average full-time income. The Central Bank’s borrowing rules allow for a loan-to-income ratio of just 3½. These metrics don’t work for most people and they’re likely to put a brake on the current price trend."

From Dmarge in Australia. "Is it really a problem that property market speculation is Australia’s favourite new hobby? What’s to stop it going on forever? DMARGE spoke to James Whelan, Investment Manager at VFS Group in Sydney, about this earlier this year. Mr Whelan characterized it all as a house of cards… albeit one he couldn’t (when we spoke to him) imagine toppling."

"The question then, according to Mr Whelan, is: 'Do you think that our financial regulators are doing enough to ensure people will be able to repay those loans should the underlying interest rates go up (which they inevitably have to do, as they are not normal right now)? Just as 18% is not normal (when it’s up there it needs to come down), 0% is not normal either – it needs to go up. f the answer to that question is, ‘no; we can’t afford to have that changed,’ then absolutely we are over-leveraged.'"

"On the other hand, the banks don’t want to foreclose 'on an entire nation of people who can’t afford normal interest rates' either, Mr Whelan told us. 'No one has a really good answer for what happens if that happens.'"

"He also pointed out that there is a difference between the US housing finance system and the Australian one: 'Right now usually what happens in a standard system – in America you can walk away, but in Australia the rest of your life is attached to [this investment] – you can’t just walk away, that’s your entire life.'"

From The Spinoff in New Zealand. "Inspired by a map of the US housing market, analyst Emma Vitz created a graph showing how much people needed to earn to afford a property in their region. The answer, unsurprisingly, is often a lot more than the average New Zealand household earns. In Auckland, an income of just over $170,000 is required, which is about $66,000 more than the median household income. Wellington requires an income of $132,000, $30,000 more than the average household actually earns."

"The New Zealand property market is a fascinating beast. We seem rather determined to make an economy out of trading non-productive assets between each other at higher and higher prices. Even Jacinda Ardern agreed, back in 2011, that our economy is a housing market with a few bits tacked on. However, it seems that the average New Zealand household struggles to get a toehold in this market, and these maps show why."

The Financial Times. "The strength of demand for housing was welcome at first — and encouraged by governments in the UK, the Netherlands and some Australian states. But the runaway market holds two concerns for policymakers. First, prices could spiral into bubble territory, making economies vulnerable to a sudden market correction that would hit household wealth. 'I’m not happy about house price increases because real estate is the surest indicator, the most compelling leading indicator for . . . a crash,' says Adam Posen, president of the Peterson Institute for International Economics."

"There are also signs of financial speculation starting to fuel prices in markets where affordability is already a problem. 'What we’re seeing is more often than not these days, the winning bidder in many of these house auctions sometimes is not a family. It’s a post office box in Delaware, which is an investor who’s never seen the house, wants the house furnished and is going to buy it for investment purposes and rent it,' said Robert Kaplan, president of the Dallas branch of the Federal Reserve."

"In response, Christina Lagarde of the European Central Bank said there were 'no strong signs of a credit-fuelled housing bubble in the euro area as a whole,' but she added that there were 'residential real estate vulnerabilities' in some countries and some cities in particular."

"'The disconnect between housing prices and broader economic developments during the pandemic entails the risk of price corrections,' she said, calling for macroprudential policies — such as national limits on mortgage lending — to be 'designed carefully to address country-specific risks.' Asked this month about the risk of monetary policy fuelling a housing bubble, Lagarde said the benefits of the ECB’s decisions 'largely outweigh the indirect effects.'"