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House prices and associated risks are rising globally

Thursday, August 1, 2019

Subject

Global property prices.

Significance

House prices have surged in the last five years, mostly in high-income economies where demand has rebounded after falling in the aftermath of the 2008-09 recession. Adjusted for inflation, house prices rose steadily across the world between 2013 and 2018, raising concerns about the downside risks associated with overvaluations.

Impacts

  • Housing markets are difficult to tune; lenient policies aimed at supporting immediate activity will increase longer-run risks.
  • Real estate markets are becoming more synchronised, and more exposed to common downside risks if global financial flows drop.
  • Cities and financial centres in advanced and emerging nations are most exposed as they enjoy more flows of volatile capital.
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