## Figure 2.4. Determinants of Real House Prices

## Source details

**Canonical URL:** [Figure 2.4. Determinants of Real House Prices](https://www.imf.org/-/media/files/publications/gfsr/2019/april/english/ch2data/charts/figure2-4.pdf)

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### Overview
- Panels 1–4 depict the association between one-year-ahead real house price growth and current financial conditions, real GDP growth, the detrended credit-to-GDP ratio, and the detrended price-to-GDP ratio.
- Lines show the estimated relationship between these variables and real house prices at the 5th percentile fit (red line), 50th percentile fit (yellow line), and 95th percentile fit (green line).
- An increase in the FCI represents a tightening of the pricing of risk in the economy.
- FCI = financial conditions index; t = current quarter; t + 4 = one-year (four quarters) ahead.
- Source: IMF staff calculations.

### 1. Financial Conditions and Real House Price Growth (Panel 1)
- Horizontal axis variable: FCI purged (t)
- Vertical axis variable: House price growth (t + 4)
- Axis range shown (vertical): –8, –6, –4, –2, 0, 2, 4, 6, 8
- Axis range shown (horizontal): –2, –1, 0, 1, 2, 3, 4
- Quantile fits plotted: 5th percentile fit (red), 50th percentile fit (yellow), 95th percentile fit (green)

### 2. Real GDP Growth and Real House Price Growth (Panel 2)
- Horizontal axis variable: GDP growth (t)
- Vertical axis variable: House price growth (t + 4)
- Axis range shown (vertical): –8, –6, –4, –2, 0, 2, 4, 6, 8
- Axis range shown (horizontal): –5, –3, –1, 1, 3, 5
- Quantile fits plotted: 5th percentile fit (red), 50th percentile fit (yellow), 95th percentile fit (green)

### 3. Ratio of Credit to GDP and Real House Price Growth (Panel 3)
- Horizontal axis variable: Credit-to-GDP ratio (t)
- Vertical axis variable: House price growth (t + 4)
- Axis range shown (vertical): –8, –6, –4, –2, 0, 2, 4, 6, 8
- Axis range shown (horizontal): –15, –10, –5, 0, 5, 10
- Quantile fits plotted: 5th percentile fit (red), 50th percentile fit (yellow), 95th percentile fit (green)

### 4. Ratio of Price to GDP per Capita and Real House Price Growth (Panel 4)
- Horizontal axis variable: Price-to-GDP per capita ratio (t)
- Vertical axis variable: House price growth (t + 4)
- Axis range shown (vertical): –8, –6, –4, –2, 0, 2, 4, 6, 8
- Axis range shown (horizontal): –0.5, –0.3, –0.1, 0.1, 0.3, 0.5
- Quantile fits plotted: 5th percentile fit (red), 50th percentile fit (yellow), 95th percentile fit (green)

### Key finding
- "The relationship between declines in real house prices and variables related to financial conditions, real GDP growth, household leverage, and overvaluation is generally stronger in the lower tail than elsewhere."

*Source: IMF staff calculations.*

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_Source: https://www.imf.org/-/media/files/publications/gfsr/2019/april/english/ch2data/charts/figure2-4.pdf_