Global Perspectives on Housing Markets
Richard Koss
International Monetary Fund
February 17, 2016
Presentation for the 2016 Annual Meeting of International Housing Association
THE VIEWS EXPRESSED IN THIS PRESENTATION ARE THOSE OF THE PRESENTERS AND SHOULD NOT BE
ASCRIBED TO THE IMF OR IMF POLICY.
1
Major Themes
1. This Economic Recovery is Fundamentally
Different
2. House Prices are Rising in Many Areas
Despite Sluggish National Economies
3. The Fallout from Low Commodity Prices has
yet to be Broadly Felt
2
This Economic Recovery is Fundamentally Different
1. Fallout from the financial crisis has been a key
factor behind slow growth in much of the
developed world
2. China’s growth is slowing as it transitions to a
new economic model
3. Deflationary headwinds have driven many
central banks to the zero lower bound, and
below
3
This Time is Different – Slower Trend Growth
4
This Time is Different – Negative Real Rates
5
House Prices are Rising in Many Areas Despite
Sluggish National Economies
1. Low interest rates are fueling demand for
housing as an investment vehicle
2. China’s price increases in tier-1 cities seem
associated with expectations of continued
fast income growth
3. Price increases in many areas are raising
concerns about affordability
6
Housing demand in the US has increased
modestly in line with overall economic growth
7
Housing supply, however, continues to make
slow progress
8
Sluggish Supply in the Face of Modest Demand
is Fueling Price Increases in the US
9
There is Significant Geographic Dispersion in
the Housing Recovery
10
Which in Turn Drives Growing Concerns about
Affordability
11
Chinese House Prices Have Risen Rapidly, and
are Very Volatile
Source: Joe Gyourko, Wharton School, “Chinese Housing Markets: What We Know and What We
Need to Know “
12
Chinese House Prices Have Risen Rapidly, and
are Very Volatile
Prices are Rising Faster than Incomes to Varying Degrees in China
13
There is a Great Deal of Regional
Differentiation in House Prices in China
Source: Joe Gyourko, Wharton School, “Chinese Housing Markets: What We Know and What We
Need to Know “
14
China’s Recent Experience Mirrors that of Other
Countries Experiencing Fast Growth
Source: Hanming Fang, University of Pennsylvania “Demystifying the Chinese Housing Boom”
15
Longer-Term Patterns Seem to be Breaking
Down
16
The Fallout from Falling Commodity Prices has
yet to be Broadly Felt
1. Historically, falling commodity price have had
a more significant impact on local housing
markets than for countries as a whole
2. House price impacts from supply shocks tend
to be less damaging than from demand
shocks; at present we seem to be
experiencing both
17
House Prices in Houston Lagged the US during
the Bubble, but have Risen Sharply Recently
210
Houston: Real House Price Index
55
US: Real House Price Index
190
Oil Price (right scale)
170
45
150
35
130
110
25
90
15
70
Q3.2015
Q4.2012
Q1.2010
Q2.2007
Q3.2004
Q4.2001
Q1.1999
Q2.1996
Q3.1993
Q4.1990
Q1.1988
Q2.1985
Q3.1982
Q4.1979
5
Q1.1977
50
18
House Prices in Calgary are Losing Momentum
180
70
Composite 11 (Canada Real
House Price Index)
160
60
AB_Calgary (Real House Price
Index)
50
Real Spot Crude Price (right axis)
140
40
120
30
100
20
80
10
60
Mar1999
0
Nov2000
Jul2002
Mar2004
Nov2005
Jul2007
Mar2009
Nov2010
Jul2012
Mar2014
Nov2015
19
Thank you…
20