Below is a chart of 11 developed-market home price indices indexed to 100 as of Q1 2000. The data is taken from the Dallas Federal Reserve’s analysis of global home prices, and uses the real prices of homes: prices adjusted for inflation using the PCE deflator for each country in question.
Finally to the good news, for current homeowners anyways. English-speaking former UK colonies are by far the most aggressively expensive home price cohort. The boom/bust cycle in home prices for Australia, New Zealand, and Canada was much shorter than it was for other economies, and now prices are grinding steadily higher again; Canada and New Zealand are the only two advanced economies at all time highs for home prices. The Canadian market, driven by foreign investment in cities like Vancouver and a boom in oil production throughout the central provinces, especially Alberta, is trending strongly to the upside. Australia had a mini-cycle downwards but is now once again moving up. But the real winner among the 11 economies is New Zealand. Home prices there have gone up by more than 93% since 2000, the best performance of any advanced economy. It’s no surprise then that the Reserve Bank of New Zealand hiked interest rates at their last meeting.
Sorry Bespoke (and apologies to all you property investors out there) it’s bad news a for the countries involved
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
