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Making Sense of Increased Synchronization in Global House Prices

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  • John V. Duca

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.

Suggested Citation

  • John V. Duca, 2019. "Making Sense of Increased Synchronization in Global House Prices," Working Papers 1911, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddwp:1911
    DOI: 10.24149/wp1911
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    References listed on IDEAS

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    1. Duca, John V. & Muellbauer, John & Murphy, Anthony, 2010. "Housing markets and the financial crisis of 2007-2009: Lessons for the future," Journal of Financial Stability, Elsevier, vol. 6(4), pages 203-217, December.
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    Cited by:

    1. Josh Ryan‐Collins, 2021. "Private Landed Property and Finance: A Checkered History," American Journal of Economics and Sociology, Wiley Blackwell, vol. 80(2), pages 465-502, March.

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    More about this item

    Keywords

    House prices; synchronization; star cities; international capital flows;
    All these keywords.

    JEL classification:

    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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