We also expect a 5-10bp growth drag through consumption as a result of a smaller wealth effect from the reduced impulse to house price appreciation… “Despite the negative impulse from higher mortgage rates, we still expect housing to make a positive contribution to growth overall. Nevertheless, the recent slowdown in the housing sector and the likely further weakness suggested by our model add to the case for a soft taper tilted toward reducing Treasury rather than MBS purchases.” That being said, the data are grounds for the Fed to announce a soft taper.
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Vacant Japan Homes Show Holes in Abenomics’ Push for Housing
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Prices for residential land sites in Tokyo have declined for each of the past 22 years except in 2007 and 2008, while the prices for land sites in regional areas have dropped for 21 years, land ministry data show. The Ministry of Internal Affairs and Communications conducts a national housing and land survey every five years. The next one is scheduled for later this year, with results to be announced next year. Abe has promised to loosen business regulations and increase government support to help Japans industry as part of the third arrow of a three-pronged strategy to end decades of deflation and achieve a 2 percent inflation rate with fiscal and monetary stimulus. Government officials have also said they may consider relaxing development rules in certain zones to meet demand for office buildings and residential space in metropolitan areas.
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