The IMF just released their Global House Price Index update. It is also worth noting that Australia, whilst experiencing significant house price growth and affordability issues, is in the middle of the pack. House prices are being impacted by significant international issues, not just local ones (factors such as financial globalisation, QE, low interest rates, low growth, rise of the Asian property investor).
Globally, house prices continue a slow recovery. The Global House Price Index, an equally weighted average of real house prices in nearly 60 countries, inched up slowly during the past two years but has not yet returned to pre-crisis levels.
The overall index conceals divergent patterns: since 2007:Q3 house prices rose in a third of the countries included in the index and fell in the other two-thirds. However, the picture may be changing: over the past year, real house prices increased in two-thirds of the countries and fell in the other third.
Cumulative Real House Price Growth Since 2007:Q3
Real House Price Growth Over the Past Year
Many countries in which house prices had been falling (such as Spain and the United Arab Emirates) have seen increases over the past year. Conversely, some countries where prices had been rising rapidly (as Brazil, China and Peru) have seen moderation in the rate of increase or a fall over the past year. As has been the case historically, house price growth and credit growth have gone hand-in-hand over the past five years. Clearly, however, credit growth is not the only predictor for the extent of house price growth; several other factors appear to be at play.
House Prices and Credit Growth
For OECD countries, house prices have grown faster than incomes and rents in almost half of the countries. These house price-to income and house price-to-rent ratios are highly correlated.
House Price-to-Income vs. House Price-to-Rent Ratio, OECD Countries
