Macroprudential Policies and Housing Markets

The general objective of this study was to examine the macroprudential policies and housing markets. Methodology: The study adopted a desktop research methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library. Findings: The findings reveal that there exists a contextual and methodological gap relating to the macroprudential policies and housing markets. Preliminary empirical review revealed that LTV and DTI caps helped stabilize housing markets by reducing credit risk and price volatility, especially when well-timed and supported by strong institutions. However, these tools alone did not address housing affordability or access challenges in lower-income segments. Unique Contribution to Theory, Practice and Policy: The Financial Instability Hypothesis, Rational Expectations theory and the New Institutional Economics may be used to anchor future studies on macropudential policies. The study recommended customizing macroprudential tools to local conditions, improving data systems, and coordinating with broader housing and fiscal policies. It also called for more inclusive, equity-focused approaches to ensure financial stability without limiting access to housing finance.