According to the IMF, housing prices are going through the roof
in most countries and posing a threat to economic stability. The
global house price index has been rising for seven quarters in a
row and prices are now well above historical averages in a majority
of countries, in relation to income and rents.
As many central banks have cut their interest rates to record
low levels, home prices have been heating up. According the
Era of Benign Neglect of House Price Booms
While a recovery in the housing market is surely a welcome
development, we need to guard against another unsustainable
boom. ….boom-bust patterns in house prices preceded more than
two-thirds of the recent 50 systemic banking crises".
Some emerging markets have seen fastest appreciation with house
prices up more than 10% in the Philippines, 9% in China and 7% in
Brazil from a year ago.
In the US, house prices have been rising fast but are still not
--at 13.4% below their long-run average relative to incomes, and
2.6% above their long-run average relative to rents but the IMF
warned that "
detecting over-valuation in housing markets is still more of an
art than a science".
Do you think it is time central banks should start paying
attention to rising housing prices and take actions to contain
housing booms. Please join the discussion below.
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