## Global House Prices: Time to Worry Again?

_IMF Blog, December 8, 2016_

## Source details

**Canonical URL:** [Global House Prices: Time to Worry Again?](https://www.imf.org/en/blogs/articles/2016/12/08/global-house-prices-time-to-worry-again)

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- [Markdown version](/en/blogs/articles/2016/12/08/global-house-prices-time-to-worry-again/index.md)
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## Bibliographic details
- Authors: Hites Ahir, Prakash Loungani
- Published: December 8, 2016

---

### Overview
- The IMF’s Global House Price Index is a simple average of real house prices for 57 countries and is now almost back to its level before the crisis.
- Context: During 2007-08, house prices in several countries collapsed, marking the onset of a global financial crisis.
- Central question raised: Is it time to worry again about a global fall in house prices?
- Judgment in the piece: The present conjuncture is a time for vigilance but not panic.

### Lack of synchronicity
- The current house-price boom is not synchronized across countries, and within countries booms are often restricted to one or a few cities.
- Three clusters identified in the Global House Price Index:
  - Gloom: 18 economies in which house prices fell substantially during the global financial crisis and have remained on a downward path.
  - Bust and boom: 18 economies in which housing markets have rebounded since 2013 after falling sharply during 2007-12.
  - Boom: 21 economies in which the drop in house prices in 2007–12 was quite modest and was followed by a quick rebound.
- City-level variation example (China):
  - Beijing: prices have increased in inflation-adjusted terms by about 25 percent a year in Beijing over the past decade.
  - Xian: prices have increased by under 10 percent a year in Xian over the past decade.
- Other city examples where local price increases exceed national averages: Amsterdam, Oslo, Vienna.

### Supply constraints
- Unlike many past housing booms driven by excessive credit growth, supply constraints appear to be playing a big role in some current price booms.
- Evidence:
  - Residential permits have grown only modestly in the "boom" and "bust and boom" country clusters.
  - In Copenhagen and Stockholm, the increase in the housing stock has not kept up with population growth, contributing to price increases.
  - The IMF has flagged supply constraints in some cities in Australia and Canada, and in many European countries—France, Germany, the Netherlands, Norway, and the United Kingdom.
- Implication: Even when price increases reflect supply constraints, their impact on household indebtedness could have adverse implications for financial stability.

### Increased vigilance and macroprudential policy
- National and international regulators are more active in monitoring house price booms and using macroprudential policies than in the pre-crisis period.
- Use of macroprudential policies has been quite extensive since the crisis, particularly in the "gloom" and "boom" clusters.
- The IMF has been urging macroprudential measures, alongside measures to boost supply, in many countries including Australia, Canada, and several European countries.
- Example of regulatory vigilance: The European Systemic Risk Board published country-specific warnings on medium-term vulnerabilities in the residential sector for eight member states: Austria, Belgium, Denmark, Finland, Luxembourg, the Netherlands, Sweden, and the United Kingdom.
- Quotation underscoring policy shift: former Deputy Managing Director Min Zhu — “The era of benign neglect of house price booms is over.”

*Source: Global House Prices: Time to Worry Again? — Hites Ahir, Prakash Loungani, December 8, 2016*

---

## Content in this bundle

- **Global House Prices: Time to Worry Again?**
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---

## References

- [عربي](http://blog-montada.imf.org/?p=4586)
- [Global House Price Index](http://www.imf.org/external/research/housing/index.htm)
- [https://www.imf.org/wp-content/uploads/2016/12/res-globalhouseprices-chart1.jpg](https://www.imf.org/wp-content/uploads/2016/12/res-globalhouseprices-chart1.jpg)
- [era of benign neglect of house price booms is over](https://blogs.imf.org/2014/06/11/era-of-benign-neglect-of-house-price-booms-is-over/)
- [China](http://www.imf.org/external/pubs/cat/longres.aspx?sk=44181.0)
- [https://www.imf.org/wp-content/uploads/2016/12/res-globalhouseprices-chart2.jpg](https://www.imf.org/wp-content/uploads/2016/12/res-globalhouseprices-chart2.jpg)
- [Australia](http://www.imf.org/external/pubs/cat/longres.aspx?sk=43320.0)
- [Canada](http://www.imf.org/external/pubs/cat/longres.aspx?sk=43948)
- [France](http://www.imf.org/external/pubs/cat/longres.aspx?sk=44080.0)
- [Germany](http://www.imf.org/external/pubs/cat/longres.aspx?sk=44029)
- [the Netherlands](http://www.imf.org/external/pubs/cat/longres.aspx?sk=43694)
- [Norway](http://www.imf.org/external/pubs/cat/longres.aspx?sk=44044.0)
- [United Kingdom](http://www.imf.org/external/pubs/cat/longres.aspx?sk=43979.0)
- [https://www.imf.org/wp-content/uploads/2016/12/res-globalhouseprices-chart3.jpg](https://www.imf.org/wp-content/uploads/2016/12/res-globalhouseprices-chart3.jpg)

_Source: https://www.imf.org/en/blogs/articles/2016/12/08/global-house-prices-time-to-worry-again_