Charting global real-estate bubbles

By Jordan Fraade
June 17, 2014

Wonder what house prices are doing around the world? Then take a look at the International Monetary Fund’s new Global Housing Watch project, which tracks global housing booms and busts. There are quite a few markets that are more inflated than ever. This chart from Matt O’Brien at Wonkblog ranks national housing markets by how much current price-to-rent ratios — that is, how much it costs to buy vs rent a similar property — deviate from the historical average.

The US is thoroughly average right now. Go us.

O’Brien explains why Canada, New Zealand, and Norway are looking so bubbly right now:

These countries’ central banks were able to fight the Great Recession on their own, which kept unemployment from rising too much and, consequently, housing prices from falling much either. But, especially in geographically-constrained places like New Zealand and Norway, there are only so many places you can build—so it’s easy for demand to outstrip supply. Especially when, as James Surowieki points out, rich Chinese (and Russians and Arabs, etc.) are eager to buy up foreign properties as either vacation spots or insurance against unrest back home.”

With the top three countries in this chart sporting ratios that are anywhere from 68 to 88 percent higher than the historical average, it might be time to reconsider whether you really need that pied-a-terre in Vancouver.

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