Housing
markets around the world are recovering. But, real estate in several countries is still overvalued, according to
the latest global house price index from the International Monetary Fund (IMF).
The
index increased in the second quarter of 2013 to its highest level since the
end of 2008, propelled by stronger residential real estate markets from Turkey
to Hong Kong and recording the 6th quarterly rise in a row.
Leading
the growth was Hong Kong where prices increased by 14.6 % compared with the
second quarter of 2012. Prices in Ukraine increased by 11.7 %, by 10 % in the
Philippines and by 8.8 % in New Zealand and Colombia.
The
weakest housing markets were in Hungary, Netherlands and Greece all of which
saw prices fall by 11 %.
IMF’s
Global House Price Index
In
other key markets, the United States saw prices rise by 6.1 %, and overall
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 nine countries in
the second quarter of 2009, when the housing crisis was in full swing.
‘The
variety of experiences across countries is really the story,’ said Mr. Prakash
Loungani, the report’s co-author and an adviser to the IMF’s research
department, adding that the global rise in home prices wasn’t entirely tied to
stronger economic growth or asset performance.
Many
markets are overvalued, according to Mr. Prakash Loungani.
These
are topped by Canada, New Zealand, Norway, Belgium, Australia, Finland, the UK,
Sweden and Spain. Markets regarded as undervalued include Japan, Greece,
Germany, Portugal & Slovenia.
Mr.
Prakash Loungani also said that prices reflect people’s feelings about their
permanent income. ‘In countries where home price appreciation risks creating a
bubble, policy makers can respond with macroprudential tools that help tighten
credit availability and take some of the fizz out of the market,’ he explained.
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