House Prices in ASEAN+3: Recent Trends and Inter-Dependence

Abstract

This study analyzes house price movements in the ASEAN+3 countries. Though there exist many reservations due to the serious limitations in the data quality and availability, the primary results appear to imply that the possibility of collapse in the ASEAN+3 region’s house prices is smaller than those in the U.S. and European countries. However, it seems also legitimate to call policy-makers’ attention on house prices in the ASEAN+3 region. Although relatively less serious than in the U.S. and European countries, the absolute magnitudes of house price appreciations in the region were substantial, and the current turmoil in housing markets in the U.S. and European countries is very likely to generate global recession, which will indirectly affect the region’s house prices through lowering growth rates of the member countries. Once house prices begin to decline in one of the countries, house prices in neighbor countries will be likely to be affected. If the possibility of house price corrections needs to be reduced, a traditional package of boosting policies - lowering interest rates and increasing government spending - seems to be warranted.

Keywords: House Price, Global Recession, Contagion

JEL Classification: F42, F41, E32