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Global House Prices Inching Up
Finance & Development, December 2013, Vol. 50, No. 4
Hites Ahir and Prakash Loungani
The housing market is recovering, but real estate in many countries is still overvalued
Global house prices rose another notch in the second quarter of 2013. This marks the sixth consecutive quarter of growth since the beginning of 2012. House prices rose in 32 of the 51 advanced and emerging market economies in the IMF’s Global House Price Index, compared with increases in 9 countries in the second quarter of 2009, when the housing crisis was in full swing. Among Organisation for Economic Co-operation and Development (OECD) members, increases and declines are more evenly balanced. But in many OECD countries, the ratio of house prices to rents—a typical measure of house price valuation—remains above historical averages, leaving room for price corrections down the road. In Canada, for example, the ratio is 85 percent above the average.
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