GLOBAL HOUSING WATCH

Q1 2017

The IMFs Global House Price Indexan average of real house prices across 57 countries

continued to climb up in the third quarter of 2016 (Figure 1). This is the sixteenth

consecutive quarter of positive year-on-year growth in the index.

Figure 1 and 2

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2000q1 2005q3 2011q1 2016q3

Sources: Bank of International Settlements, European Central Bank, Federal Reserve

Bank of Dallas, Savills, and national sources

Figure 1: Global House Price Index

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2000q1 2008q2 2016q3

Figure 2: Real House Price Index2010Q1=100

Gloom

Bust and Boom

Boom

Source: Bank for International Settlements, European Central Bank, Federal Reserve Bank of Dallas,

Savills, and national sources

Gloom = Brazil, China, Croatia, Cyprus, Finland, France, Greece, Italy, Macedonia, Morocco,

Netherlands, Poland, Russia, Serbia, Singapore, Slovenia, Spain, Ukraine. Bust and boom = Bulgaria, Denmark, Estonia, Germany, Hungary, Iceland, Indonesia, Ireland, Japan, Latvia, Lithuania, Malta,

New Zealand, Portugal, South Africa, Thailand, United Kingdom, United States. Boom = Australia, Austria, Belgium, Canada, Chile, Colombia, Czech Republic, Hong Kong SAR, India, Israel, Kazakhstan,

Korea, Malaysia, Mexico, Norw ay, Peru, Philippines, Slovak Republic, Sw eden, Sw itzerland, Taiwan.

2

However, house prices are not rising everywhere around the world. As noted in our Q4 2016

Quarterly Update, Figure 2 shows that developments in the countries that make up the index

fall into three clusters: gloom, bust and boom, and boom.1

In addition, house prices are also not climbing up everywhere within countries. Figure 3

shows that in many countries, house prices are subdued at the national level compared to the

city level.

Figure 3

1 See Wall Street Journal story: Why It Isnt Yet Time to Worry as Global House Prices Rise

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Gloom Bust and Boom Boom

Figure 3: Real House Price Growth: Difference Between National vs. Major CityHouse price growth since 2013, in percent

Source: Bank of International Settlements, European Central Bank, Federal Reserve Bank of Dallas, Knight Frank Research, Savills, and national sources, and author's calculations.

Countries and cities included:--Gloom = Brazil: Rio de Janeiro, China: Shanghai, Croatia: Zagreb, Cyprus: Nicosia, Finland: Helsinki, France: Paris, Greece: Athens, Macedonia: Skopje, Netherlands: Amsterdam, Russia: Moscow, Singapore: Singapore, Slovenia: Ljubljana, and Spain: Madrid.--Bust and Boom = Denmark: Copenhagen, Estonia: Tallinn, Hungary: Budapest, Iceland: Reykjavik, Indonesia: Jakarta, Ireland: Dublin, Japan: Tokyo, Latvia: Riga, New Zealand: Auckland, Portugal: Lisbon, South Africa: Johannesburg, United Kingdom: London, and United States: San Francisco.--Boom = Australia: Melbourne, Austria: Vienna, Belgium: Brussels, Canada: Toronto, Chile: Santiago, Colombia: Bogota, Hong Kong: Hong Kong, India: Delhi, Israel: Tel Aviv, Korea: Seoul, Malaysia: Kuala Lumpur, Mexico: Mexico City, Norway: Oslo, Slovakia: Bratislava, Sweden: Stockholm, Switzerland: Zurich, and Taiwan: Taipei City.

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http://www.imf.org/external/research/housing/report/pdf/1116.pdfhttp://www.imf.org/external/research/housing/report/pdf/1116.pdfhttp://blogs.wsj.com/economics/2016/12/30/why-it-isnt-yet-time-to-worry-as-global-house-prices-rise/

3

Recent IMF assessments provide a more nuanced view of the within country house price

developments (Table 12).

On house price divergence within countries:

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 20072015 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.

2 The table provides the dates when these assessments were published. It is important to note that these may not

completely reflect the current situation due to adjustments in housing demand, supply, and policies since

publication.

http://www.imf.org/~/media/Files/Publications/CR/2017/cr1742.ashxhttp://www.imf.org/~/media/Files/Publications/CR/2017/cr1726.ashxhttp://www.imf.org/~/media/Files/Publications/CR/2017/cr1733.ashx

4

Figures 4 and 5

Besides the residential property market, the commercial property market is another important

element of the real estate market. Sentiment indicators for commercial real estate developed

by RICS show a positive relationship with residential prices (Figures 4 and 5).

Figure 4 plots average house price growth for 2013-16 vs. RICs occupier sentiment index

(OSI) average for 2013-16. The OSI indicator is the unweighted average of tenant demand

(+), rent expectations (+), and available supply (-). Figure 5 plots average house price growth

for 2013-16 vs. RICs investment sentiment index (ISI) average for 2013-16. The ISI

indicator is the unweighted average of investment enquiries (+), capital value expectations

(+), and available supply (-).

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Figure 4: House Prices and Commercial Investment Sentiment Index

Source: Bank of International Settlements, European Central Bank, Federal Reserve Bank of Dallas, RICS,

Savills, Sinyi Real Estate Planning and Research, and national sources

Countries included: Australia, Austria, Brazil, Bulgaria,

Canada, China, Czech Republic, France, Germany, Hong Kong, Hungary, India, Ireland, Italy, Japan, Netherlands, New Zealand, Poland, Portugal, Russia, Singapore, South Africa, Spain, Sw itzerland, United

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Figure 5: House Prices and Commercial Occupier Sentiment Index

Source: Bank of International Settlements, European Central Bank, Federal Reserve Bank of Dallas, RICS,

Savills, Sinyi Real Estate Planning and Research, and national sources.

Countries included: Australia, Austria, Brazil, Bulgaria, Canada, China, Czech Republic, France, Germany, Hong Kong, Hungary, India, Ireland, Italy, Japan,

Nether