The global housing market is coming full circle it seems. Experts from certain quarters are getting apprehensive about the health of the housing markets, with sentiments that cast reflections on pre-2008 times.
According to an Oxford Economics’ proprietary tool for measuring global housing conditions, home prices have declined by 10% and investments in houses have shrunk by 8%.
China alone, one of the biggest global housing market, has over the past decade accumulated household debt to the scale of $6.8 trillion driven by a housing boom during the period.
In 2018, primary residential sales reached $1.9 trillion according to China’s national bureau of statistics while some analysts have already concluded that the bubble is nearer to its limit.
The Bank of International Settlements has determined that the Asian giant has seen a 70% rise in personal debt over the past three years, most of it generated through residential mortgages.
Real estate is a key driver of Chinese economy and at any rate, China is the world’s largest housing market according to SCMP.
Meanwhile, data from Oxford Economics shows that residential property investment in China is slowing down similar to stats for new construction projects.
“A combined slump in-house prices and housing investment in the major economies could cut world growth to a 10-year low of 2.2% by 2020 – and to below 2% if it also triggered a tightening in global credit conditions,” says Oxford Economics researchers.
Economists think that the risk of prices falling is amplified by high house valuations in several global markets.
The Oxford Economics researchers, economists Slater and Payne, argue that in any case, when some key global markets detect remarkable contractions, the effects could spill over creating a global contagion.
Experts say the cautionary piece is the nearly significant slow down across many markets and it is all embedded in global economics.
The International Monetary Fund’s latest research points to a shrinkage in global GDP growth by 0.3% to 3.3% in 2019 before resuming 2018 levels in 2020.
Recent downturns in global housing markets have been closely tied to economic recessions.