International Real Estate Prices

In excerpts of his interview broadcast on CNBC today, former Fed Chairman Alan Greenspan noted that while the boom in real estate prices in the US was impressive, the gains looked modest in comparison to other countries.  Since 2000, the average price of a new home in the US has risen by nearly 50%.  Of the G-7 countries for which we have data, only Japan has seen lower returns.  This begs the question -- if the reversion of prices to the mean for US real estate is negatively impacting our economy (and the profits of many foreign banks), what kind of impact would falling real estate prices in international markets have on the global economy?

 

Comments

[CorksOnMyForks]

This chart is really an eye-opener. I've looked over a lot of similar data, and the 48.9 percent increase looks like it is in real values (i.e. adjusted for inflation.) Does anyone know for sure if this is the case for all of the countries in the chart?

[JLS]

Housing Bubble are almost in every rich country, but it's true that in USA people are much more in debt than most country, (UK and Spain too) and another problem savings are the lowest in the world in USA with Australia.

From 1997 to 2007

South Africa : +380
Ireland +251
Britain + 211
Spain + 189
Australia + 149
France +139
Sweden +138
Belgium +131
NZ +116
Netherland +102
Italy 98

Japan - 32%

[Paul Hickey]

All housing figures are in each country's local currency and not adjusted for inflation. The source for the US figures are from the Census Bureau's Average Price of a new single-family home.