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This report examines the experiences of four European countries that have had large house-price declines in recent years. In particular, it examines the experiences of Denmark, Ireland, the Netherlands, and Spain—four countries in which the house-price cycle has been especially large and that share a similar institutional environment (a common monetary policy and the EU’s institutional framework)—with a view to exploring how policies can best support economic recovery in the wake of a house-price bust. The paper draws on and synthesizes related Selected Issues papers that are being or have been drafted as part of the 2014 Article IV consultations with these countries. These countries’ experiences share similarities, but also important differences. Shocks to house prices, unemployment, and bank balance sheets were most severe in Ireland and Spain, reflecting in part a higher amplitude of residential construction. However, the boom- bust cycle has, together with other shocks, left all four countries facing significant output gaps, as well as elevated levels of private-sector debt that pose headwinds for growth. Promoting recovery following a house-price bust requires a multi-pronged strategy. Large house-price busts can leave countries facing wide output gaps, a highly indebted private sector, and weaker bank balance sheets. Addressing these problems simultaneously can be challenging, as efforts often involve trade-offs (e.g., faster deleveraging can widen output gaps). A careful and multi-pronged strategy is thus required to minimize trade-offs and accelerate sustainable recovery. Important progress has been made in this regard in all four countries.

International Monetary Fund --- Internationaal monetair fonds --- International monetary fund --- Denmark --- Ireland --- Netherlands --- Spain --- Espagne --- Espainiako Erresuma --- España --- Espanha --- Espanja --- Espanya --- Estado Español --- Hispania --- Hiszpania --- Isupania --- Kingdom of Spain --- Regne d'Espanya --- Reiaume d'Espanha --- Reino de España --- Reino d'Espanya --- Reinu d'España --- Sefarad --- Sepharad --- Shpanie --- Shpanye --- Spanien --- Spanish State --- Supein --- イスパニア --- スペイン --- The Netherlands --- Pays-Bas --- Países Baixos --- Holland --- Spanish Netherlands --- Pays-Bas espagnols --- Austrian Netherlands --- Pays-Bas autrichiens --- Oostenrijkse Nederlanden --- Southern Netherlands --- Pays-Bas méridionaux --- Zuidelijke Nederlanden --- Niderlandy --- Belanda --- Nederland --- Koninkrijk der Nederlanden --- Reino dos Países Baixos --- Royaume des Pays-Bas --- Kingdom of the Netherlands --- Países Bajos --- Holanda --- Nederlân --- Hulanda --- Beulanda --- Niderland --- Niderlande --- هولندا --- مملكة هولندا --- Mamlakat Hūlandā --- Olanda --- Payis-Bâs --- Países Baxos --- Aynacha Jach'a Markanaka --- Nirlan --- Niderland Krallığı --- Kē-tē-kok --- Landa --- Kerajaan Landa --- Нидерландтар --- Niderlandtar --- Нидерландтар Короллеге --- Niderlandtar Korollege --- Нідэрланды --- Каралеўства Нідэрланды --- Karaleŭstva Nidėrlandy --- Nederlands --- Niadaland --- Holandija --- Kraljevina Holandija --- Izelvroioù --- Нидерландия --- Niderlandii︠a︡ --- Кралство Нидерландия --- Kralstvo Niderlandii︠a︡ --- Països Baixos --- Нидерландсем --- Niderlandsem --- Нидерландсен Патшалăхĕ --- Niderlandsen Patshalăkhĕ --- Nizozemsko --- Paesi Bassi --- Regnu di i Paesi Bassi --- Iseldiroedd --- Nederlandene --- Niederlande --- Kéyah Wóyahgo Siʼánígíí --- Nižozemska --- Kralojstwo Nederlandow --- Madalmaad --- Ολλανδία --- Ollandia --- Hollandia --- Κάτω Χώρες --- Katō Chōres --- Βασίλειο των Κάτω Χωρών --- Vasileio tōn Katō Chōrōn --- Nederlando --- Reĝlando Nederlando --- Paisis Bajus --- Herbehereak --- Herbehereetako Erresumaren --- هلند --- Huland --- Niðurlond --- Háland --- Paîs Bas --- Neerlande --- Ísiltír --- Ríocht na hÍsiltíre --- Çheer Injil --- Çheer y Vagheragh --- Reeriaght ny Çheer Injil --- Tìrean Ìsle --- Hò-làn --- Недерлендин Нутг --- Nederlendin Nutg --- 네덜란드 --- Nedŏllandŭ --- Hōlani --- Nederlandia --- Pais Basse --- Regno del Paises Basse --- Нидерландтæ --- Niderlandtæ --- Нидерландты Къаролад --- Niderlandty Kʺarolad --- Konungsríkið Holland --- הולנד --- Holand --- ממלכת ארצות השפלה --- Mamlekhet Artsot ha-Shefelah --- Walanda --- Hollandi --- Нидерландла --- Niderlandla --- Нидерландланы Королевствосу --- Niderlandlany Korolevstvosu --- Néderlandzkô --- Нидерланд --- Iseldiryow --- Ubuholandi --- Ubuhorandi --- Nederilande --- Нидерланддар --- Niderlanddar --- Uholanzi --- Ufalme wa Nchi za Chini --- Нидерландъяс --- Niderlandʺi︠a︡s --- Нидерландъяс Корольув --- Niderlandʺi︠a︡s Korolʹuv --- Peyiba --- Holenda --- Keyatiya Nederlandan --- Payises Bashos --- פאייסיס באשוס --- Nīderlandeja --- Batavia --- Regni Nederlandiarum --- Nīderlandes Karaliste --- Nyderlandai --- Nyderlandų Karalystė --- Paixi Basci --- Paes Bass --- Ulanda --- Holland Királyság --- Keninkryk fan 'e Nederlannen --- Reino di Hulanda --- Холандија --- Кралство Холандија --- Kralstvo Holandija --- Pajjiżi l-Baxxi --- Hōrana --- Недерлатт --- Nederlatt --- Оцязорксши Недерлатт --- Ot︠s︡i︠a︡zorksshi Nederlatt --- Нидерландын Вант Улс --- Niderlandyn Vant Uls --- Tlanitlālpan --- Huēyitlahtohcāyōtl in Tlanitlālpan --- Eben Eyong --- Nederlaand --- オランダ --- Oranda --- オランダ王国 --- Oranda Ōkoku --- Ulanna --- Nethiland --- Nederlande --- Holandska --- Holland (Kingdom) --- Batavian Republic --- United Provinces of the Netherlands --- Dacia (Kingdom) --- Dania --- Daniė --- Danie Korolygʺo --- Danii︠a︡ --- Danii︠a︡lʺul Khanlʺi --- Danimārk --- Danimarka --- Danimarka Krallığı --- Daniyah --- Danmark --- Dannemarc --- Danska --- Danyah --- Denemarke --- Denemarken --- Denemearc --- Denemearc þæt Cynerīce --- Denmaakʻŭ --- Dennemarck --- Dinamarca --- Kingdom of Denmark --- Kongeriget Danmark --- Koninkryk van Denemarke --- Ndinamayka --- Reino de Dinamarca --- Даниэ --- Дания --- Даниялъул Ханлъи --- Дание --- Дание Королыгъо --- دنمارك --- Irish Free State --- Housing --- Prices. --- Financial Risk Management --- Infrastructure --- Real Estate --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Housing Supply and Markets --- Economic Development: Urban, Rural, Regional, and Transportation Analysis --- Debt --- Debt Management --- Sovereign Debt --- Finance --- Property & real estate --- Macroeconomics --- Housing prices --- Loans --- Debt restructuring --- Prices --- Financial institutions --- National accounts --- Asset and liability management --- Saving and investment --- Debts, External