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Real Estate Price Indices230
9.1 For macroprudential analysis, it is highly desirable to have indices of real estate
prices both because deposit-takers may have large exposures (both direct and indirect) to
real estate and may be affected by the potential volatility of price movements. Moreover,
real estate assets are a major element of the wealth of the private sector. The direct
exposure to risks arising from real-estate-related lending of deposit-takers can be
monitored through the FSIs related to real estate loans that are described in Chapter 6.
9.2 Deposit-takers’ exposure to real estate prices can arise because they may
Own real estate.
Lend to customers to purchase, construct, or develop real estate.
Take collateral in the form of real estate.
Lend to other deposit-takers who have real estate exposures or who fund real
Be subject to the risk that real estate loans will be prepaid, which can contribute to
balance sheet volatility and asset-liability mismatches.
Own securities on which the payment of principal and interest is backed by real
Be exposed to the real-estate-related lending exposures of subsidiaries or branches
in other economies.
Be exposed to households and corporations which can be affected by changes in
the servicing costs of real-estate-related borrowing and/or price movements in real
230 In October 2003, a joint IMF/BIS conference was held at IMF Headquarters in Washington D.C. The
conference brought together academic experts, real estate practitioners, policy officials, national statistical
compilers, and representatives of international and regional organizations to explore the relationships
between real estate and financial stability, the information needed on real estate, technical aspects of
compilation of real estate indicators, and possible avenues for future work. This chapter reflects s