The Housing Cycle in Emerging Middle Eastern Economies and its Macroeconomic Policy Implications

Abstract

This paper examines housing finance and housing price dynamics in selected emerging\rMiddle Eastern economies over the past two decades. It finds that (i) mortgage markets have\rexperienced rapid development, which has led to lower private per capita consumer spending\rvolatility this decade; (ii) a downward price correction occurred in the housing market after\r2007, which appears to have bottomed out; (iii) the rental market appears to be largely\rdetermined by region-specific economic fundamentals—a youthful working-age population\rand wealth variables; and (iv) a segregation between self-owned house and rental price\rdynamics exists in this region, rendering the former more sensitive to the business cycle.