Housing Bubbles Abroad?

With the run up in home prices in the U.S. some people are concerned about a possible housing bubble again.  But several economists have popped a hole in this belief based on market fundamentals.  Lending standards having gotten tighter and the size of down payments have increased from the pre-housing bubble burst.   However, the story aboard seems to be different.  The Deputy Managing Director of the International Monetary Fund (IMF), Martin Zhu, noted in a recent speech that housing prices were climbing in several countries.

house prices around the world_rev2 copyCanada is experiencing strong home and apartment construction and has high price-to-rent and price-to-income ratios making affordability tighter.  It is also experiencing a lot of foreign investing from China.  Real home price appreciation has almost hit 20 percent.

The country of Norway has reported around a 30 percent jump in home prices since the worst of the Global Recession which is partly due to surging population and incomes as a result of immigration. A large portion of the consumer’s wealth is sitting in illiquid real estate and household debt is high, so a housing downturn could hurt the country.


Since the beginning of 2009, Switzerland’s home prices have increased more than 20 percent and mortgage debt has jumped to 140 percent  of GDP, which for some analysts is a warning sign.  There have been efforts to tighten lending standards, as we have seen here in the U.S. after the housing collapse, and increased bank reserves.  For these countries and several others real estate is still booming but are there bubbles looming?

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