Milestones in European Housing Finance

Jens Lunde, Department of Finance, Copenhagen Business School Jens Lunde has been Associate Professor in the Department of Finance at Copenhagen Business School since 1984. He previously taught in the Department of Economics at the University of Copenhagen and worked for the Danish Ministry of Housing and the Danish Building Research Institute. His main specialisms are in housing finance with a particular emphasis on the analysis of individual data. Christine Whitehead, Emeritus Professor in Housing Economics, Department of Economics, London School of Economics She works mainly in the fields of housing economics, finance and policy. She has worked with a wide range of international agencies as well as regularly for the UK government and parliament.

• Notes on Contributors xvForeword by David Miles, Professor of Financial Economics, Imperial College, London xxiAcknowledgements xxiii1 Introduction: Milestones in European Housing Finance since 1989 1Jens Lunde and Christine WhiteheadWhy analyse developments in housing finance? 1Defining housing finance 3The countries 4Trends in mortgage systems 5Mortgage debt and house price increases – enabling each other? 7Conclusions 13References 142 European Housing Finance Models in 1989 and 2014 15Jens Lunde and Christine WhiteheadIntroduction 15Mortgage systems 16Funding the supply of mortgages 21Mortgage characteristics 25Overview 33References 353 Australia’s 25 Years with a Deregulated Housing Finance System: Looking Back and Looking Forward 37Judith Yates and María Belén YanottiThe economic and institutional environment of the last 25 years 37Key milestones 39Impacts and implications of changes 43Emerging issues 48Conclusion 51Acknowledgements 51References 524 Milestones in Housing Finance in Austria over the Last 25 Years 55Alexis Mundt and Elisabeth SpringlerThe economic and institutional environment of the last 25 years 55Finance milestones 57Impacts and outcomes 66Looking to the future 70Acknowledgements 71References 715 Milestones in 25 Years of Housing Finance in Belgium 75Sien Winters and Katleen Van den BroeckIntroduction 75The Belgian housing finance system 76The economic and institutional environment of the last 25 years in Belgium 76Milestones during the last 25 years of housing finance in Belgium 77Impacts 86Looking to the future 88Acknowledgements 89References 896 Milestones in Housing Finance in the Czech Republic since 1990 93Petr Sunega and Martin LuxIntroduction 93Milestones in housing finance 95Impacts 102Future prospects 106Acknowledgements 106Notes 106References 1077 Milestones in Danish Housing Finance since 1990 109Jens LundeIntroduction 109The economic environment of the last 25 years 110The Danish mortgage system 111Key milestones 113The impacts of these milestones over the last 25 years 117Parallel development in house prices andowner‐occupiers’ net debt 118The housing crisis, the national banking crisis and the Global Financial Crisis 121The aftermath 123The rescue operations 124Looking to the future 124Acknowledgements 125References 1268 Milestones in Housing Finance in England 127Kathleen Scanlon and Henryk AdamczukIntroduction 127The economic and institutional environment of the last 25 years 128Milestones in private housing finance 128Milestones in social and affordable housing finance 136Impacts 138Looking to the future 142Note 143References 1449 Milestones in Housing Finance in Finland 147Timo Tähtinen and Tommi LaantiIntroduction 147Key milestones 148Impacts and implications of changes 154Looking to the future 161References 162Further reading 16210 Milestones of Housing Finance in France between 1988 and 2014: Is the French Credit System a Gallic Oddity? 165Christian Tutin and Bernard VormsIntroduction: A quarter of a century later 165Finance milestones 166Specifics of French housing finance 171Impacts 175Looking to the future 179Conclusions 180References 18111 Milestones in the Development of the German Housing Finance System in the Last 25 Years 183Stefan KofnerThe initial situation in 1989 183Milestones at a glance 184German reunification (1990): A friendly takeover by the white knight? 184The conversion of homeownership subsidisation from a tax to a grant system (1996): Heading for a new balance of tenures? 186Integration and deregulation of capital markets: risks for the future? 187Trying to run a housing system without subsidies 190Measures to rescue the financial system since 2008 191The dynamics of the German system of housing finance since 1989 196Notes 198References 19812 Moving from an Authoritarian State System to an Authoritarian Market System: Housing Finance Milestones in Hungary between 1979 and 2014 201József Hegedüs and Eszter SomogyiFrom socialism to capitalism: the economic and institutional environment 201Finance milestones in the housing system 204 Impacts 214The future of the housing finance system 216 References 21713 Housing Finance in Iceland: Milestones 1989–2014 219Lúðvík Elíasson and Magnús Árni SkúlasonIntroduction 219The economic and institutional environment of the past 25 years 220The bumpy ride of Icelandic housing finance 221Impacts 232Looking to the future 235References 23714 Milestones in 25 Years of Housing Finance in Ireland 239Padraic KennaKey milestones 239Emerging issues 248Conclusion 251Acknowledgements 252Notes 252References 25315 Milestones in Housing Finance in the Netherlands, 1988–2013 255Marja Elsinga, Hugo Priemus and Peter BoelhouwerIntroduction 255Milestones over the three periods 256Impacts 265Reflection 270Acknowledgements 271References 27116 Housing Finance in Norway: The Last 25 Years 273Rolf BarlindhaugIntroduction 273The economic and institutional environment of the last 25 years 274Finance milestones 275The financial crisis 281Impacts of the housing finance milestones 283Looking into the future 286Conclusion 287Acknowledgements 288References 28817 Milestones of Housing Finance in Poland 291Marta Widłak and Jacek ŁaszekIntroduction 291Housing finance milestones 292Impact of housing finance milestones in Poland in the last 25 years 301Looking towards the future 307References 30818 The Housing Finance System in Portugal since the 1980s 309Romana Xerez and Jaime R. S. FonsecaIntroduction 309Context: a legacy of family financing, the impact of the 1974 revolution and the period to 1989 310Milestones in the development of the Portuguese housing market and housing finance since 1989 313Impacts 319Conclusions 321Acknowledgements 323References 32319 Evolution of the Housing Finance System in Russia 325Maria Plotnikova, Andrey Tumanov and Evgeniya ZhelezovaIntroduction 325Brief review of basic features of the Soviet era housing system 326The housing system during the transition to a market economy (1990s) 328Forming the basis for a housing mortgage financing system (1997–2005) 329Between the market and the state (2005–2013) 333State programmes to stimulate housing demand and supply 333The effect of the GFC 335What lies ahead? 337References 33920 Housing Finance in Slovenia: From a National Housing Fund to a Bank‐Driven System 341Andreja Cirman and Richard SendiThe economic and institutional environment of the last 25 years 341Major policy changes 342Impacts 353Looking to the future 356References 35721 Housing Finance in Spain: From the Liberalisation of the Mortgage Market to Booms and Busts 359Irene Peña and Baralides AlberdiThe economic and institutional environment of the last 25 years 359Finance milestones 360The impact of these milestones over the last 25 years 367Looking to the future: financing into the future 372References 37422 Milestones in Swedish Housing Finance 375Peter EnglundBackground 375Key milestones 378Impacts 386Looking to the future 389References 39023 Housing Finance in Turkey over the Last 25 Years: Good, Bad or Ugly? 393Yener CoşkunIntroduction 393The Turkish housing finance system over the last 25 years from a marketisation perspective 394Finance milestones: The rise of marketisation and changes in housing finance 400Impacts of the transformation of the housing finance system 402Future trends in housing finance markets 405Gated communities and housing finance 405Conclusions 408Acknowledgements 409References 41024 Milestones in EU Housing and Mortgage Markets 413Jennifer Johnson, Lorenzo Isgrò and Sylvain BouyonMilestones in EU housing and mortgage markets 4131990–2000 – Milestones: The Single European Market, deregulation and consolidation and product innovation 4132001–2008 – Milestones: EU focus on mortgage credit, growth of covered bonds and adoption of the Capital Requirements Directive (CRD) 4182008–2014 – Milestones: Restoring financial stability, consumer protection and unlocking long‐term financing 421Conclusion 428References 43025 Following On From a Quarter of a Century of Mortgage Debt 433Jens Lunde and Christine WhiteheadIntroduction: 1989 and 2014 433Trends in mortgage systems over the quarter century 436The impact of the GFC 439Conclusions: looking back and looking forward 443References 446

"The great strength of this book is that detailed and up to date information on housing finance systems is presented in a way which allows for informed comparisons between countries. The result is that we have here a rich stock of information on the same fundamental set of characteristics of housing finance markets. Jens Lunde and Christine Whitehead have done a fine job in editing and assembling this volume. They also provide three overview chapters which draw out some of the lessons from the experience of this large group of countries. A book like this which tracks the evolution of housing finance across countries and takes a detailed look at where we are now is immensely valuable."—From the Foreword by David Miles, Professor of Financial Economics, Imperial College, London