Diving Into The IMF’s Global Housing Update: Bubbles And Busts


The IMF’s Global House Price Index, an average of real house prices across 57 monitored countries, continues to climb.

The index shows sixteenth consecutive quarters of positive year-on-year growth. However, house prices are not rising everywhere around the world.

Three Different Paths Since 2000

National Index vs. Major Cities

Price Divergences

  • On Australia, IMF assessment points out that house price gains have moderated. However, the extent of cooling has varied considerably across cities. The strongest price increases continue to be recorded in Sydney and Melbourne, where underlying demand for housing remains strong. With house prices still rising ahead of income, standard valuation metrics suggest somewhat higher house price overvaluation relative to the previous IMF assessment.
  • On Austria, IMF assessment notes that the cumulative increase in the house price index over 2007–2015 was nearly 40 percent. To a large extent, this increase was driven by price dynamics in Vienna. The OeNB residential price index indicator, which assesses whether prices move in line with fundamental factors, points to an overvaluation of property prices of about 22 percent for Vienna, while prices in the rest of the country appear broadly in line with fundamentals.
  • On Turkey, IMF assessment points out that the housing market exhibits significant variations across cities. Regional variations have been further accentuated by the presence of more than 2.7 million Syrian refugees since March 2011. Cities near the Syrian border, which have absorbed larger masses of Syrian refugees have seen significant rises in local housing prices since 2011, though they have moderated in recent years.
  • Mish Comments

    Figure 1 screams “global bubble” even though some countries did not participate. Australia and Canada are the the center of the bubble along with some countries I was unaware of.

    China is also in a massive bubble but that’s not what Figure 2 suggests.

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