## Figure 3.4. Global Financial Conditions, Portfolio Channels, and Expectations Contribute to House Price Synchronization, as Do Supply Constraints and Local Policy

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**Canonical URL:** [Figure 3.4. Global Financial Conditions, Portfolio Channels, and Expectations Contribute to House Price Synchronization, as Do Supply Constraints and Local Policy](https://www.imf.org/-/media/files/publications/gfsr/2018/april/chapter-3/pdf/figure3-4.pdf)

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### Key transmission channels shown
- Global financial conditions
- Global investors
- Global lenders
- Portfolio channels (Trade, FDI)
- Expectations
- Domestic financial conditions
- Business cycle
- Supply constraints
- Local policy

### Interactions between countries (diagram elements)
- Country A ↔ Country B connections:
  - Trade, FDI
  - Business cycle
  - House prices
- Global influences on both countries:
  - Global financial conditions → Global investors; Global lenders
  - Expectations interacting with global investors and global lenders
- Domestic mediators:
  - Domestic financial conditions
  - Supply constraints
  - Local policy
  - Business cycle → House prices

### Conceptual conclusions implied by the figure
- House price synchronization across countries is driven by multiple channels operating simultaneously:
  - Global financial conditions and cross-border portfolio channels (Trade, FDI)
  - Global investors and global lenders transmitting shocks
  - Expectations that influence investor and lender behavior
  - Domestic financial conditions that amplify or dampen external influences
  - Supply constraints and local policy that shape local house price responses
  - Business cycle linkages reinforcing cross-country house price comovements

*Source: IMF staff. Note: FDI = foreign direct investment.*

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_Source: https://www.imf.org/-/media/files/publications/gfsr/2018/april/chapter-3/pdf/figure3-4.pdf_