How Bad Are Housing Price Declines Worldwide?

IMF research economist Prakash Loungani reports some statistics on the extent to which housing price declines are being seen worldwide.

Source: Loungani (2008)

The house price decline during 2008 has actually been more modest in the U.S. than in countries such as Denmark, New Zealand, the U.K., and Spain, though the price decline has been going on for much longer in the U.S. and it is the cumulative decline from the price peak that is the key determinant of the extent of mortgage defaults. Loungani notes from previous international and U.S. regional experience that the bigger the real estate price decline, the more severe the economic downturn we might expect.

Source: Loungani (2008)

The Wall Street Journal also has some neat interactive graphics on international movements in stock prices and exchange rates.

Comments

[JasonC:]

Um, 6 months of data with only the change and not the level is completely meaningless for this question. The relevant question is the full drawdown peak to present. And also the ratio of house prices to median household disposable income, at each country's top and at present.

2008 Oct 14 04:45 PM

[Mafeking:]

The data is rather misleading. Since it is only the first half of 2008 it gives misleading impressions.

Canada for example has not declined as much as the US yet the graph covering a specific time period indicates otherwise. Canada's house prices only began to soften in mid 2008 whereas the US decline has been going on for 18 months or so.

2008 Oct 14 06:57 PM

[Nick Gogerty:]

I appreciate the global breadth of the information. Thanks for the post.

2008 Oct 15 09:31 AM

[TRUSSO:]

Great Information. Tell them how good Central American real estate opportunities are.

Best,

Thomas
realtyexecutivescentra...

2008 Oct 15 12:18 PM