IMF’s Global House Price Index Rises to Highest Level Since 2008

The International Monetary Fund’s index of global house prices rose to the highest level since the end of 2008, propelled by stronger residential real-estate markets from Turkey to Hong Kong.

The measure gained to 127.4 in the three months ended June 30, the fifth straight quarterly advance and highest level since the final three months of 2008, according to figures summarized in the IMF’s Finance and Development report released today. The housing market is recovering “but real estate in many countries is still overvalued,” according to the report, which surveyed 50 countries and Hong Kong.

Leading the ranking was a 14.6 percent jump in Hong Kong house prices in the second quarter from a year earlier, followed by an 11.7 percent advance in Ukraine, a 10 percent gain in the Philippines, and 8.8 percent increases in New Zealand and Colombia, according to the IMF’s data. The weakest performers were declines of about 11 percent in Hungary, Netherlands and Greece.

“The variety of experiences across countries is really the story,” Prakash Loungani, the report’s co-author and an adviser to the IMF’s research department, said in an interview.

Prices in the U.S. rose 6.1 percent in the second quarter from a year earlier, the data showed. Using a house price-to-rent ratio, residential properties in the U.S. are overvalued 0.76 times more than the historical average, according to data compiled in the index.

The global rise in home prices wasn’t entirely tied to stronger economic growth or asset performance, Loungani said. Prices also “reflect people’s feelings about their permanent income,” Loungani said.

In countries where home-price appreciation risks creating a bubble, policy makers can respond with “macroprudential tools” that help tighten credit availability and “take some of the fizz out of the market,” Loungani said.

To contact the reporter on this story: Ben Schenkel in Washington at bschenkel@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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