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The price of housing in rich countries returns to pre-crisis level

The Bank of payments reflects that the real value of the houses took a decade to recover

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The price of housing in rich countries returns to pre-crisis level
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The international comparison of housing prices is a challenge to which Bank of International Settlements (BPI), central Bank coordinator based in Basel (Switzerland), is trying to respond. To this end, it collects national statistics, integrates results of new and used housings, and contrasts m with cost of living in each country: inflation, especially in some emerging economies, can raise several rungs of hit price escalation.

In its last review, BIS notes that " price of residential ownership continued to rise rapidly in most advanced and emerging economies in second quarter of 2017". The supervisor of central banks, which directs Spaniard Jaime, adds that in rich countries real value, discounted inflation, of house grows to 4% annual, which puts m "almost back in ir precrisis levels".

The statistic reflects that prices of households in developed economies were in second quarter barely 1% below ir real value at end of 2007, at height of housing bubble. If trend is maintained, and first data of third quarter will corroborate it — in Spain, real price of homes increased to 5%, compared to 3% of first half of 2017 — pre-crisis level will be overcome with slack in advanced countries at end of year.

Upturn in 2017

The real price of housing is added to or vital constants that recover lost pulse in crisis: economic activity, international trade, employment in a large part of major economies, results of companies, tax collection or Stock market quotation. But a decade later, scars are also evident: more poverty and inequality in western and some emerging economies, lower-quality jobs, less labor-market participation, high debt levels, lower wages, investment Rickety, contained inflation and interest rates barely taken off 0%.

Despite retaking pre-crisis price level, comparison of real estate market cannot be straightforward eir: neir value increases at speed of boom times, nor new financial regulation, recent even nightmare of subprime mortgages and or Toxic artifices, it facilitates construction of new speculative pyramids in markets.

As with any analysis of housing market, diversity dictates: in Western countries data from countries where alarm of anor bubble has already been on — real value of households in Canada is 49% higher than that of a decade ago. , in Australia it is 30% higher, and in Germany about 20% — with more discrete evolutions — in Japan, 2% have been revalued — or still notable delays.

The eurozone, lagging behind

The US housing market is one step away from real recovery (5% below prices of 2007) and eurozone remains (-8.6%) even furr back. The delay of economies most plagued by crisis — real value of houses in Greece is 47% lower, in Spain, 34%, in Ireland, 29% —, weighs evolution of area.

The disparity is even more pronounced in emerging countries. The analysis of Bank of payments emphasizes that, in se economies, " evolution of prices has taken up its upward trend, after waver between 2013 and beginning of 2016". Even with that pothole, real housing prices in India triple those of a decade ago, and those of Hong Kong, gateway to Western investment in China, almost double, with annual increments around 20%.

In real estate market of 70 major Chinese cities, evolution of which is followed by analysts, increase in prices has been moderated somewhat (6% annual, 11% above levels of 2007), while in Brazil and Russia, which barely emerge from a hard rec Esión, price reversal continues. But while Brazilian economy has not been enough to exhaust heritage of real estate boom, Russian Federation shows worst comparison (almost 50% below pre-crisis level) among 60 countries analyzed.

Spain scale with feet of lead

Population, mortgages and unsold new homes. These are factors that lead to Bank of Spain, in its latest report on housing market, to anticipate an increase in prices more content than in years of real estate boom .

Between 2002 and 2006, bubble swelled at rates above 10% per year. In third quarter of this year, housing price rose by 7% — 5% in real terms — biggest increase in a decade.

But Spanish supervisor points out that volume of unsold new homes (half a million still across country) hampers evolution of price in Mediterranean. New mortgages also increase at "moderate pace". And rise in residential demand "will be more modest", given null demographic growth anticipated in coming years.

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