House prices are on the rise again around the world
WHEN the bottom finally fell out of America’s housing market in 2006, it triggered the worst global recession since the 1930s. But rising house prices need not spell disaster. The Economist’s latest round-up of house prices across the globe shows that prices have risen over the past year in 21 of the 26 economies we track, at a median pace of 4.7% (see table). Not every rise is alike, however.
America is still—just—in the category of countries where the housing market remains in recovery. House prices there increased by 4.7% in the 12 months to July, according to the Case-Shiller national index. Prices have now risen by 25% from their 2011 trough, but still remain 7% from their 2007 peak. The Economist measures national affordability by comparing prices to the long-run average of their relationship with rents and income. On this basis, we reckon house prices in America are broadly at their fair value.
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