Making Sense of Increased Synchronization in Global House Prices

18 Pages Posted: 22 Oct 2019 Last revised: 11 Mar 2020

See all articles by John V. Duca

John V. Duca

Federal Reserve Banks - Federal Reserve Bank of Dallas; Oberlin College

Date Written: 2019-10-09

Abstract

Evidence indicates that house prices have become somewhat more synchronized during this century, likely reflecting more correlated movements in long-term interest rates and macroeconomic cycles that are related to trends in globalization and international portfolio diversification. Nevertheless, the trend toward increased synchronization has not been continuous, reflecting that house prices depend on other fundamentals, which are not uniform across countries or cities. Theory and limited econometric evidence indicate that the more common are fundamentals, the more in-synch house price cycles will become and the more substitution effects may matter. In addition, real estate markets that are open to immigration and foreign investment have become more sensitive to shifts in the international demand for property by migrants or investors.

Keywords: House prices, synchronization, star cities, international capital flows

JEL Classification: R0, R20

Suggested Citation

Duca, John V., Making Sense of Increased Synchronization in Global House Prices (2019-10-09). FRB of Dallas Working Paper No. 1911, Available at SSRN: https://ssrn.com/abstract=3473105 or http://dx.doi.org/10.24149/wp1911

John V. Duca (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Dallas ( email )

2200 North Pearl Street
PO Box 655906
Dallas, TX 75265-5906
United States

Oberlin College

Oberlin, OH 44074
United States

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