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Mortgages, developers and property prices

Author

Listed:
  • Michael Chui
  • Anamaria Illes
  • Christian Upper
Abstract
This special feature studies the risks posed by the rapid rise in property developer debt in several Asian economies in recent years. Gradually, the firms involved are shifting away from traditional bank loans and choosing to issue debt securities, often in foreign currency. So far indebtedness has tended to be low for most firms, but weak profitability and declining interest coverage ratios give cause for concern. The firms are thus vulnerable to shocks, such as increases in interest rates, falling property prices or local currency depreciations. Even if outright defaults can be avoided, the weakening fundamentals of the sector could spill over to other parts of the economy through lower house prices.

Suggested Citation

  • Michael Chui & Anamaria Illes & Christian Upper, 2018. "Mortgages, developers and property prices," BIS Quarterly Review, Bank for International Settlements, March.
    • Handle: RePEc:bis:bisqtr:1803i
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    References listed on IDEAS

    as
    1. Bernanke, Ben S. & Gertler, Mark & Gilchrist, Simon, 1999. "The financial accelerator in a quantitative business cycle framework," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 21, pages 1341-1393, Elsevier.
    2. Corsetti, Giancarlo & Pesenti, Paolo & Roubini, Nouriel, 1999. "What caused the Asian currency and financial crisis?," Japan and the World Economy, Elsevier, vol. 11(3), pages 305-373, October.
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    4. Quigley, John M., 2001. "Real Estate and the Asian Crisis," Journal of Housing Economics, Elsevier, vol. 10(2), pages 129-161, June.
    5. Boris Hofmann & Ilhyock Shim & Hyun Song Shin, 2016. "Sovereign yields and the risk-taking channel of currency appreciation," BIS Working Papers 538, Bank for International Settlements.
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    7. Boris Hofmann & Gert Peersman, 2017. "Is there a debt service channel of monetary transmission?," BIS Quarterly Review, Bank for International Settlements, December.
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    More about this item

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F30 - International Economics - - International Finance - - - General
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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