Even though homes aren’t tradable, like soybeans or car parts, home prices across the world have become increasingly synchronized. This reflects a variety of factors, according to the [International Monetary Fund], including the increasing tendency for economic growth and interest rates to move in parallel across nations. — The Wall Street Journal
An interesting report from Sarah Chaney of The Wall Street Journal illuminates some of the ways in which housing markets across the globe—which are currently showing signs of a slowdown—are increasingly falling into line with one another as the power of the global economy continues apace following the Great Recession.
One reason, according to the report, is that following 2008, many major economies took to reducing interest rates as a way of spurring new investment. Chaney writes, "In the period of low interest rates following the global financial crisis, wealthy investors in the hunt for better yields swooped in to buy properties in major financial hubs. In effect, residential prices in those cities have become globally synchronized much as stocks and bonds are."
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