The Future of Housing: Policy Scenarios

Abstract

OECD Working Papers should not be reported as representing the official views of the OECD or its member countries. The opinions expressed and arguments employed are those of the author(s).

Improving economic opportunities for all in Belgium

“…For example, local schools are likely less diverse than in mixed neighbourhoods, which is associated with more unequal school performance. The spatial concentration of people of foreign origin further compounds social mobility challenges, as deprived migrants are spatially isolated within large cities, such as Brussels, Antwerp and Liège (Costa and de Valk, 2018 [21]).…”

“…After 2035, the heavy renovation rate declines uniformly towards 1% per year by 2050. Source: Cournède et al (2020), The Future of housing: Policy scenarios.…”

Mortgage finance across OECD countries

“…Loan-to-value (LTV) and debt-service-to-income (DSTI) caps are effective instruments to curb household debt (Cerutti, Claessens and Laeven, 2017[4]; Kuncle, 2016[21]; BIS, 2018 [22]; IMF, 2011 [23]) or housing cycles (Armstrong, Skilling and Yao, 2019 [24]). LTV-caps are furthermore associated with a lower likelihood of severe economic downturns (Cournède, Sakha and Ziemann, 2019 [12]) and significantly fewer mortgage arrears (Stanga, Vlahu and de Haan, 2020 [25]). In contrast to LTV caps, DSTI and LTI caps become more restrictive as house price appreciation outpaces household income development.…”

“…Furthermore, as mortgage interest relief results in higher mortgage debt, it also contributes to greater macroeconomic volatility. Countries where the overall effective taxation of housing (of which mortgage interest relief is an important determinant) is higher have shown to be less exposed to severe economic downturns (Cournède, Sakha and Ziemann, 2019 [12]).…”

Population ageing and government revenue

“…In the majority of OECD countries, the revenue fully accrues to sub-national governments, and, in only four countries, the share attributed to central governments exceeds 40% of total recurrent taxes on properties 32. For instance, increasing the share of inheritance taxes (while keeping the overall government revenue constant) tends to boost growth, while increasing the share of wealth taxes reduces growth strongly (Cournède, Fournier and Hoeller, 2018[89]). 33 For example, replacing the stepped-up basis to a carryover basis in the United States could raise USD 105 billion over ten years (around 0.1% of GDP per year) (Congressional Budget Office, 2018[99]).…”