Via FTAlphville comes this from Alessandro Rebucci of Johns Hopkins University Carey Business School, based on a BoE working paper that he recently co-authored:
In some parts of the emerging world, housing markets have grown well ahead of income in recent years. US interest rates are about to rise, and international capital will revert to the center, seeking higher and safer yields. This will bring about an earthquake in housing markets at the periphery of the global financial system.
…According to the Global Housing Watch of the IMF (Figure 1), for instance, house prices (and credit) in Brazil, China, and Turkey are still running well ahead of inflation, even though income growth has long slowed in these economies. Particularly worrisome in Brazil and Turkey, inflation is high and the current account deficit is quite large; these economies are still overheating and relaying on foreign borrowing to spend beyond their means. In contrast, prices in India and Russia are falling as domestic problems have already poked the housing bubble.
The full text of this article is available to MacroBusiness subscribers
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.
