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Property Prices in Malta

These documents contain excerpts about property prices in Malta, mdina and valletta obtained from the Central Bank Annual Reports issued between 1998 and 2009. Excerpts taken from the Central Bank Annual Reports: http://www.centralbankmalta.com/site/publications2.asp

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2005 Report

Introduction

Malta is one of the most densely populated areas in the world.1 This makes land in Malta a relatively expensive asset, with houses comprising one of the major vehicles of investment in which a large proportion of domestic equity is traditionally kept.

Developments in the housing market have important implications for existing homeowners, real estate agents and operators in the construction industry. Demand and supply conditions as well as movements in house prices are also of concern to the Central Bank of Malta in view of the latter’s responsibility for maintaining price and financial market stability.

A number of academic papers have commented on asset price behaviour and, in certain cases, the appropriate policy response. Thus, Bernanke and Gertler (1999) explore the implications of asset price volatility for the management of monetary policy, and show that it is desirable for central banks to focus on underlying inflationary pressures rather than on asset prices themselves. In contrast, Bordo and Jeanne (2002) note that acting pre-emptively through monetary policy when asset prices are booming can sometimes be beneficial given the potentially large welfare costs in terms of output and wealth resulting from a subsequent collapse in asset prices.

The question of why the monitoring of house prices is important for a central bank remains an essential issue for the setting of monetary policy. Cecchetti et al. (2000) argue for a monetary policy strategy that reacts pro-actively to asset prices, especially housing prices. According to the IMF’s World Economic Outlook (2003), house price busts were slightly less frequent than equity price busts in the post-war period, but were associated with larger adverse financial and real effects. Helbling and Terrones (2003) state that this may imply that monetary authorities should pay relatively more attention to housing prices than to equity prices. Gruen et al (2003) find that, ceteris paribus, the case for “leaning against” an assetprice bubble through monetary policy is stronger the lower the probability of the bubble bursting of its own accord, the larger the efficiency losses associated with big bubbles, and the higher the assumed impact of monetary policy on the bubble process.

House prices are also important with respect to the stability and soundness of the banking system. Rising house prices generally boost the value of collateralised property. This encourages banks to lend further, thus expanding total domestic credit. Borio and Lowe (2002) state that sustained rapid credit growth, combined with large increases in asset prices (equity prices, residential and commercial real estate), appears to increase the probability of an episode of financial instability. Accordingly, in some situations a monetary response to credit and asset market developments may be appropriate to preserve both financial and monetary stability.

This concern arises because falling house prices can have serious adverse effects: bank collateral shrinks and non-performing loans rise, severely curtailing the capacity of banks to lend, as occurred in Japan in the latter part of 1980s. The collapse of house prices weakened the Japanese financial system and increased the taxpayer’s burden to compensate for the losses incurred by investors (Shiratsuka, 2003). The same occurred in some European countries, such as Finland, where the housing market boom in the 1980s was encouraged by excessive lending following financial liberalisation. In Sweden, following the collapse of a house price bubble in the early 1990s, house prices fell to their pre-boom levels leaving banks exposed as the collateral pledged against the mortgage was valued at less than the loans outstanding (Royal Institution of Chartered Surveyors, 2003).

Detken and Smets (2003) analyse 38 boom periods since the 1970s in 18 OECD countries. During boom periods, the authors observe real investment hikes and loose monetary conditions. However, they note that not all booms are followed by large output losses. They observe that high-cost booms are those in which real estate prices and investment crash in post-boom periods. High-cost booms seem to follow very rapid growth in real money and real credit stocks just before the boom and at the early stages of the boom. During high-cost booms, rates of change of real estate prices and consumption growth are significantly higher and the investment (especially housing) GDP ratio deviation from trend rises faster over the whole boom period.

In the local context, various initiatives have been taken in recent years to analyse and measure aspects of the housing market in Malta. Demarco (1995) constructed a house price index based on advertised house prices both by type and locality going back to 1980. He studied the relationship between house prices and personal income and analysed certain factors that may have impacted on the local housing market, such as local and foreign demand, subsidised housing, the rent laws, restrictions on land for development purposes and the demand for property as an investment.

Cordina (1999) built various supply and demand models to analyse the change in house prices. He considered four strategies: subsidising demand, encouraging market supply, setting price ceilings and the provision of Government housing. Camilleri (2000a) constructed a housing affordability index as a valuation model that combines the market rates of affordable housing and the household median income together with the dwelling size, to arrive at an affordable home. Brinkworth and Vella (2000) also developed a calculation of affordability of a two and threebedroomed flat and analyse the market affordability of social applicants, while Delia (2000) analyses the economic prospects for the future of social housing in Malta.

Mifsud (2000) studied the economic impact of housing schemes that were introduced in the 1980s. He noted that the provision of low-priced and free building plots for housing prevented house prices from rising beyond the normal index of inflation. When these schemes were stopped to channel urban development activity into existing and planned development areas, house prices increased much faster than the GDP. However, according to Mifsud, this may not have been brought about by the planning policies themselves, since a large number of building permits have been issued each year since 1993.

This paper seeks to build upon previous contributions and to analyse further the main determinants of house prices in Malta. For this purpose, a new house price index based on advertised prices from 1980 to 2004 was developed (Central Bank of Malta, 2004). In the following sections, the paper first explores demand-side factors, such as demographics and affordability ratios, before analysing supply-side factors, such as development permits granted and the existence of vacant properties. The paper then considers monetary aspects and studies the link between the growth in bank lending and average house prices. Finally, movements in house prices are compared with those in the Malta Stock Exchange Index (MSEI).

Factors affecting demand

According to the Census of Population 1985 and 1995, the total population in Malta stood at 345,705 and 378,404, respectively. The number of households was 104,742 in 1985 and 127,970 in 1995. This implies an increase of 32,699 in population and a 23,228 increase in households during this period. Table 1 gives the official figures for the population from 1985 to 2003, together with the estimated number of households for the same period. The latter were estimated by: (i) taking the ratio of households to population in 1985 and 1995 and smoothing the difference in values between these years; (ii) using the same ratio of households to population in 1995 to estimate the number of households for the subsequent years to 2003.

Between 1995 and 2003 the population increased by 21,463 while the estimated number of households increased by 7,225. The ratio of the population increase divided by the increase in households is 2.97, which is very close to the official figure of an average of 3.1 persons per household in 1995.

Table 1 also shows the number of marriages per year. Although one can interpret these figures as the increase in the demand for housing by firsttime buyers in each year, the net increase in households each year is not necessarily equivalent to the number of marriages. The increase in first-time buyers due to marriages is supplemented by single people living alone, separated couples, households seeking to buy a second property and foreigners purchasing property in Malta. On the other hand, the number of existing households is also reduced each year as people living alone die. Consequently, the estimated change in the number of households in Table 1 is significantly less than the number of marriages. These patterns may result in a partially segmented property market, with first-time buyers being more likely to purchase flats and maisonettes. Thus, while the demand for flats and maisonettes is growing at least in line with the number of marriages each year, this increase is counterbalanced by the availability of a number of vacant properties coming into the market as a result of the deaths of people living alone.

Property demand is affected in the long run by households’ nominal income. In the short run, however, purchasing power is provided by banks through the provision of mortgages. Over time, average income usually rises, allowing mortgages to increase simultaneously. Table 2 shows the maximum amount that could be borrowed from the banks by a worker earning an average income. The loans for single applicants are based on the assumption that the maximum loan is four times as much as the gross annual salary. The loans for joint applicants up to 1998 are based on the assumption that the maximum loan is four times the income of the husband plus an additional Lm5,000. From 1999 onwards the maximum loan available is 3.5 times the joint income. Moreover, after 1995 banks increased the repayment period from 25 to 30 years and after 2003 this was increased to 40 years. Hence, this easing of lending policies allowed banks to provide larger mortgages for an extended number of years, further accommodating demand.

This Table also shows the amount that has to be made available for single and joint applicants to be able to purchase a property. It is assumed that the loan from the bank is only 90% of the value required, while the buyers must provide the remaining 10%. In addition, Table 2 also shows the purchasing power of single and joint applicants with regard to purchasing a finished flat or maisonette. The latter are also shown in Chart 1.

This Chart shows that throughout the survey period a single applicant with an average income would have been in a difficult position to afford a flat or maisonette. It is estimated that a single person, on average, had 80% of the funds required to purchase a flat and 71% of the funds to purchase a maisonette. Conversely, under the same conditions it was easier for a couple to purchase a flat or a maisonette. As can be seen from Table 1, a couple had, on average, 122% of the funds required to purchase a flat and 107% of the funds required to purchase a maisonette.

In 1997 and 1998 the purchasing power of a couple dropped to 95% of the value of a flat and 82% of the value for maisonettes. This may have been one factor that induced banks in 1999 to ease their lending policies. However, the purchasing power of a couple fell after 2001 to 96% of the value of a flat and 88% in case of a maisonette in 2004.


One commonly used measure of the relative affordability of housing is the ratio of the average house price to average disposable income (PriceWaterhouseCoopers, 2004). Table 3 shows such affordability ratios with respect to finished maisonettes and flats as well as terraced houses. The affordability ratio is simply the average value of the property as a proportion of the average yearly income. In 2004, the average buyer needed 8.12 years of income to purchase a flat, 8.87 years of income to purchase a maisonette and 15.53 years for terraced houses. For the whole period 1982-2004, the affordability ratio averaged 5.64 years for flats, 6.47 years for maisonettes and 10.20 years for terraced houses. One notes that over the last two years, the ratio has increased significantly.

Demographic factors, mainly the increase in households, have slowly increased the demand for housing on a yearly basis. Furthermore, the growth in average yearly income provided further impetus for the banks to provide larger amounts of credit towards house purchases.

Factors influencing supply

Table 4 shows the overall position of the housing stock as at the 1995 Census of Population. In every category of housing a significant proportion of properties appears vacant. Overall, 35,723 properties (23% of total) were vacant as at census date, a third of which were summer residences (12,967 properties). At 40%, the highest proportion of vacant properties was recorded in the flats category.

The phenomenon of vacant properties also existed in previous censuses. According to the 1957 Census, vacant properties were 6.13% of total housing stock. In 1967 the proportion stood at 14.7% and in 1985 this rose to 19.2%. Over the span of 38 years to 1995, the proportion of vacant properties rose to 23.0%. Moreover, according to the 1995 Census, 23.6% of 35,723 vacant properties were newly constructed, 50% were in a good state of repair, 20% were in need of repair while the rest (6.4%) were in a dilapidated condition.

Table 5 shows the ratio of total new permits for the construction of apartments and maisonettes to the number of marriages each year. It is assumed that the housing market is partially segmented and that these types of dwellings are mainly sold to newly-weds who are first-time buyers. Over the eight years to 2000, 18,401 permits were granted for new apartments and maisonettes while 19,390 marriages took place. This amounts to a ratio of 0.95 dwellings per couple. Hence, if we assume a segmented housing market with newly-weds purchasing mainly apartments and maisonettes, one can conclude that there was a relatively stable relationship between demand and supply in this market during this period. However, between 2001 and 2003, 13,394 permits were granted for apartments and maisonettes while 6,784 marriages occurred. The ratio of dwellings to marriages stood at 1.97. Consequently, over this period one notes a significant excess supply of apartments and maisonettes for first-time buyers, though this excess may be overstated if other categories of buyers also entered the market. Prices of apartments and maisonettes kept on rising during this latter period, despite the presence of an apparently significant excess supply.

The relationship between total permits for new dwellings and the increase in households per year between 1993 and 2003 is shown in Table 6. Over this period, permits for a total of 37,066 new dwellings (apartments, maisonettes and terraced houses) were issued while the increase in households stood at 14,154. If we accept the above reasoning that the supply of apartments and maisonettes is being met by the demand from newly-weds (at least up to 2000), then 22,912 mostly already-built properties (the difference between 37,066 new dwellings and the 14,154 increase in households) became vacant between the years 1993 and 2003. This has pushed up the ratio to 2.62 new dwellings for every new household over the ten-year period. Thus, one can conclude that up to the year 2000, the vacant property phenomenon is what caused excess supply in the total property market, as until then, the number of new flats and maisonettes equalled the number of marriages. After 2000, the vacant properties included both previously-built properties and newly-built apartments and maisonettes. An increase in vacant properties normally implies a less efficient use of scarce land resources.

If this line of reasoning holds, one has to consider why such a large number of properties were still being held vacant. The current rent legislation is probably one of the reasons for this phenomenon. The fact that housing is also considered as a prime investment vehicle by the Maltese is another possible factor. Hence, the increase in housing stock could reflect a desire to allocate a larger share of total investment to housing due to a perceived lack of alternative local investment outlets. In addition, developers may consider property to be a good investment and so are reluctant to lower prices.

Paradoxically, vacant properties increased simultaneously with the increase in house prices, possibly because property owners were expecting large capital appreciation on their property and so they were reluctant to sell at lower prices. Other reasons could be inheritance problems within families and the perception among the Maltese public that property appreciates faster than other assets.

One should also note that the 37,066 new permits issued between 1993-2003 amount to 23.9% of the total housing stock as at the 1995 Census. On the basis of past trends and the analysis above, it is likely that the Census of 2005 will reveal an even larger proportion of vacant properties. Indeed, Manduca (2004), quoting the Malta Environment and Planning Authority (MEPA), reports that the vacant housing stock increased by 4,000 properties in 2003 alone.

MEPA was established on 30 October 1992, evolving from the Planning Area Permits Board (PAPB) within the Works Department. To date and under the present planning system, urban development and environmental protection are controlled by MEPA through the Development Planning Act (1992) and the Environment Protection Act (1991).

The 1988 Act allocated schemes for building development and designated the boundaries for future urban areas. The Structure Plan set up a number of local plans which required the revision of the existing building schemes based on the Temporary Provisions Schemes (TPS) of 1988. The Structure Plan includes two main policies: first, that no form of urban development can be permitted outside the existing and committed builtup areas and, second, that any permits for urban development outside the specified boundaries must first be approved by MEPA. These policies probably increased the relative price of land within the acceptable building boundaries.

Another factor influencing supply was the strictness of the rent-related regulatory regime existing before 1995, which was a key element deterring owners from putting their property on the rental market. As time went by, rent regulations created significant market inefficiencies, exacerbating the shortage in available housing for rent even though many vacant properties existed. Over time, the lack of available property for rent induced households to purchase property and become homeowners. Apart from causing a shortage in supply of housing for rent, rent regulations also led to a deterioration of the housing stock that was rented for minimal amounts, as it was not profitable for landlords to invest in the upkeep of their property.

In 1995 the rent laws were amended so that landlords could start renting to Maltese tenants at market rates and could raise the rent on the expiration of the lease agreement. However, owners may still be reluctant to rent to Maltese tenants, possibly due to fears that the current legislation may be revised, combined with a lack of faith in the ability of the judicial system to enforce rent agreements efficiently.

Monetary factors

Every transaction in the real sector of the economy is accompanied by a corresponding one in the monetary sector. The majority of house purchases are financed through bank mortgages. Hence, the volume of house loans outstanding represents the monetary side of the transactions that occur when house purchases are made. The monetary values of bank loans directed towards house purchases provide the mechanism that matches the demand with the supply side of the market.

Chart 2 shows the total house loans outstanding in the banking system between 1980 and the third quarter of 2004. Total house loans include loans towards the construction and modernisation of existing dwellings, together with loans for the purchase of completed dwellings. As indicated in the Chart, total house loans have increased over the years at a steady exponential rate, reaching Lm512 million in the third quarter of 2004.

Chart 2 also illustrates the year-on-year percentage change in total house loans outstanding. Rapid growth rates are evident in the early 1980s up to March 1986, where the average yearly percentage change amounted to 33.5%. Subsequently, the annual percentage change of house loans fluctuated almost within a band of 10% to 20%. Between March 1986 and September 2004, the average percentage change amounted to 15%, while the average growth rate for the whole period was 19.1%.

Monetary theory links movements in prices to monetary growth, reflected to a large extent in domestic credit expansion when there are no distortions in the credit market. House prices, as measured by the revised Central Bank of Malta house price index, increased on average by 7% per year from 1980 to 2004. The link between the movements in house prices and bank credit is clearly observed in the years after 1986. Thus, while the annual increase in house prices between 1986 and 2004 was 8.5%, there was a 15% yearly growth in bank credit for mortgages. However, house prices between 1980 and 1986 remained stable despite significantly high growth rates in total mortgage loans (averaging 33.5% on an annual basis) during this period. This was due to the fact that the Government was actively subsidising the housing market through the sale of plots of land at very low prices to young couples. In addition, there was a greater tendency towards home ownership coinciding with a new burst of borrowing for housing at that time. Thus, one can conclude that monetary growth is necessary, but not sufficient to generate increases in house prices.


Strong expansion in mortgage lending in recent years is also shown by the growth in total house loans per capita as depicted in Chart 3. Total home loans outstanding per capita steadily increased from Lm2,637 in March 1980 to Lm3,925 in December 1986, remaining below Lm4,000 up to June 1996, and then steadily increasing to reach Lm6,000 by December 2000. Since then, home loans per capita continued to increase, reaching an estimated Lm8,000 by December 2001, Lm10,000 by June 2003 and Lm10,778 by September 2003.

The house loans mentioned above are not the only bank credit provided to the property sector. Three other types of property-related facilities were identified. These include loans towards the building and construction sector, loans for re-sale and development of property and loans towards the construction, upgrading and modernisation of hotels. The total outstanding credit to these three sectors, together with the total mortgages for house loans, is depicted in Chart 4. This chart shows that total property lending reached Lm200 million by the first quarter of 1994, before accelerating to reach Lm900 million by September 2004.

The year-on-year percentage change in total property lending is also depicted in Chart 4, which shows a double-digit rise in almost all the years. Annual growth rates fluctuated for most of the years within a band between 10% and 20%, with an average annual growth of 17%.

The rapid rates of growth in property lending caused the proportion of total property lending to total bank lending, which is depicted in Chart 5, to increase. In the early 1980s property lending accounted for 22% of total bank lending. This ratio increased throughout the years to reach 43% by the third quarter of 2004. Similarly, total house mortgages accounted for 10% of total bank lending in 1980, rising to 25% by 2004. Chart 7 clearly shows the growing importance of property lending for banks. Over the last 25 years bank credit related to property increased significantly and almost doubled as a share of the total loan portfolio. This reflects the increased importance of the growth of the property industry in the Maltese economy relative to other productive sectors.

Rate of growth in house prices

The Central Bank of Malta has extended its house prices index, which is based on advertised prices, to include average and median prices for different types of properties since 1980 (Central Bank of Malta, 2004). The types of properties surveyed include flats and maisonettes in both shell and finished form, terraced houses, town houses, houses of character, villas and bungalows as well as luxury properties. A price index was developed for each of these categories as well as for the overall average, weighted by the number of properties in each category. See Appendix 1 for average property prices and Appendix 2 for median prices. Work on further refinements to the index is ongoing.


Chart 6 shows the growth in advertised median and average prices across all types of property. A close relationship is observed between the growth rates in median and average prices. Prices remained relatively stable between 1980 and 1987 and started to increase thereafter. Overall, average prices were Lm17,009 in 1980 and Lm16,364 in 1987, and then increased 5.3 times to Lm86,376 by 2004. Similarly, overall median prices were Lm16,661 in 1980 and Lm15,509 in 1987, and had increased 5.1 times to Lm78,690 by 2004.

Chart 7 highlights the annual percentage change in total property prices where a variable annual percentage increase can be seen. The growth rates of average and median prices track each other relatively well with similar positive and negative changes in the same years. Negative double-digit growth rates occurred in 1985 and 1987 for average prices and in 1983 and 1987 for median prices. Also, double-digit positive growth rates for both average and median total prices are evident in eight other years of the sample.


In addition, Table 7 shows the annual average compound growth rates for each of the ten categories of properties for both the 1980-2004 and 1987-2004 periods. Since property prices remained relatively stable between 1980-1987, the compound growth rates in the 1987-2004 period are higher than in the 1980-2004 period for both the average and median prices. Moreover, for almost all categories of properties the growth rate in median prices is smaller than the growth rate in average prices.

For the 1980-2004 sample period, average prices rose by 7% per year, while median prices rose by 6.7% per year. The highest annual rate of change in average prices was for the luxury category at 8.6% per annum, while for median prices the highest yearly growth rate was 8.2% for terraced houses.

For the 1987-2004 sample period, average prices and median prices rose by 10.3% per year and 10% per year, respectively. The fastest annual growth rate in average prices was 12.2% registered in the maisonettes in shell form category, while the largest annual growth rate in median prices was 11.6% registered in the houses of character category.

Meanwhile, the average yearly growth in the CPI for the 1980-2004 period was 2.5%, while for the 1987-2004 period it also stood at 2.5%. This implies that homeowners enjoyed a 4.6% real return per year on average prices on overall property types (4.2% real return on total median prices) for the 1980-2004 period. In the latter period (1987-2004) home owners enjoyed a 7.8% real return per year on average prices on overall property types and a 7.5% real return on total median prices.

One effect of house price increases is an expansion in consumption through a perceived rise in consumer wealth. This increase in consumption can take place through two channels: directly through increased consumption out of current income due to a lesser need to save, and indirectly through borrowing for consumption purposes as the rise in property prices can provide additional equity release which is collateralised by property. Ludwig and Sløk (2002) analyse the different impacts of stock and house prices on consumption in 16 OECD countries. They found that the long-run impact on consumption of an increase in stock and house prices is in general higher in countries with a market-based (as opposed to bank-based) financial system. In addition, the sensitivity of consumption to changes in stock wealth is approximately twice as large as the sensitivity to changes in housing wealth.

The potential wealth effect is shown in Table 8. The monetary value of the housing stock over the years was calculated each year by multiplying the number of dwellings in each housing category in the 1995 Census by the final average price in each category derived from the Central Bank of Malta house price index. The loans taken up by the personal sector towards the purchase of dwellings were then deducted to arrive at the net monetary value of the housing stock. The net monetary value of 1995 housing stock was Lm21.4 billion in 1995. By 2004, this value at market prices more than doubled to Lm44.5 billion. Table 8 also shows the ratio over the years of the value of the housing stock to nominal GDP. One notes that although between 1995 and 2002 the ratio of the net monetary value of the housing stock to nominal GDP was relatively stable at an average of 17.56 times, in 2003 the ratio rose to 20.68 and in 2004 to 24.01 times.

A BIS study (Sutton, 2002) on house prices in six advanced economies found a positive relationship between changes in equity values and house prices over the medium to longer term. Nevertheless, when comparing the return on housing with the return on stock exchanges, one has to note that households can borrow funds from credit institutions to finance the purchase of property but are unable to borrow the equivalent funds to purchase equities to the same extent. Hence, households face a credit constraint to invest in stock indices. One should also note that for individual households, the interest payments on mortgages should first be deducted before any comparison of the rate of return on housing can be made.

Chart 8 compares developments in house prices and equity prices in Malta since the end of the second quarter of 1995. Over this period, whereas average house prices rose by 8.42% and median house prices increased by 8.11% at an annual compound rate, the MSEI went up by 10.83% on the same basis. An explanation for the higher rate of growth on the MSE could possibly be that the MSE was still in its infancy and was characterised by shallow trading where a few transactions could have had significant effects on market movements.

However, the cumulative annual return on house prices surpassed the return on other domestic financial assets. Between 1995 and 2004, the compound annual growth rate for time deposits was 4.7%, for one-year Treasury bills it was 4.6%, while that on ten-year government bonds was 5.88%. One should note that these assets are more liquid and less risky and should therefore offer lower returns than property.

Conclusion

This paper analysed the various factors that influenced house prices in Malta between 1980 and 2004, when they increased by 7% on average annually. It was found that the estimated increase in the annual number of households is less than the increase in the annual number of newly-built properties. This suggests that there has been a progressive increase in the excess supply of properties in Malta. In spite of this excess, house prices rose each year. The paper also analysed the relationship between bank credit and the demand for housing. It was noticed that banks eased their lending practices in recent years and consequently were able to provide larger mortgages for an extended number of years, thus accommodating demand. Finally, it was noted that over the last ten years, the return on property in Malta was lower than that on the MSE but surpassed that on other financial assets.

House prices in Malta appear to be increasing due to the relative scarcity of land for development purposes. As long as land remains scarce, its relative price is expected to keep on rising with demand. Prices in the housing market also depend on the purchasing capacity of first-time buyers. This factor drives the lower end of the housing market, with prices of more expensive properties also increasing as a result. This paper has shown that the ratio between flat and maisonette prices and first-time buyers’ income has increased. As long as supply costs due to increased land and construction prices keep on rising, and buyers still have the capacity to purchase property due to the availability of increased mortgages, house prices are likely to continue to rise. The rising trend, however, might end should current policies governing the allocation of land for building be eased or if the terms and conditions of mortgages for house purchases are tightened.

A number of issues merit further study and econometric work is underway to derive the estimated empirical relationships between house prices, bank credit and average disposable income.


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