The World House-Price Boom

The Economist has noted for a couple of years now that the surge in house prices in the US is not a national phenomenon, but rather an international one.

In fact, several countries started a dramatic run-up in house prices before the US, and rose further and faster. In particular, Great Britain, Ireland, Australia, New Zealand, and Spain had exceptionally hot housing markets during the first half of this decade.

It seems now that those markets are all cooling, to varying degrees, as this table from this week’s Economist illustrates.

Note that the figures from the US are not particularly comparable to those from other countries, because the US is so much larger than all of the other countries in the table. A better comparison would be to break the US market into regions.

Such a regional analysis shows considerable (and utterly unsurprising) variation masked by the national US figures.

This look at house prices in the US makes one thing clear: in all regions of the US, the house price bubble picked up steam in the past year, rather than began to slow as it did in most other parts of the world.

The Economist article goes on to point out that the housing boom has been responsible for the majority of economic growth in the US of the past couple of years. Which of course implies that US economic growth could be seriously at risk when the housing bubble comes to an end.