House Prices Propping up the Global Economy
US house prices rose by 8.6% compared to inflation of 2.2% according to a new global survey of house prices in this week's Economist. The average for the 13 countries studied by the economist was 5.4%. In the News on March 8 we reported the 15.5% rise in 2001 Australian house prices and the 20.6% rise in Melbourne prices. Closest to Australian price rises have been Spain, Ireland and Britain at 15.4%, 14.0% and 10.5%.
Whilst homeownership is high in Australia at 70%, it is higher still in Ireland(83%), Spain(81%) and Italy(78%). Bottom of the list is Germany where only 43% own their own home reflecting both the early 1990's merger with East Germany and the old European tradition to rent and spend income on lifestyle.
Overseas, sharemarket wealth fell over the year, however the Economist reports that consumers have been extending mortgages through home-equity loans and rock bottom interest rates. This has helped consumers maintain spending despite recessionary trends. This cannot go on forever as eventually spending and income have to come into balance.
Posted Thursday, 28 March 2002
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