Finance and economics
Global house prices
America surges, much of Europe sinks
HOUSING markets are prone to boom-and-bust cycles, with prices overshooting then undershooting sustainable levels.
To work out whether they are over- or undervalued,The Economist uses two gauges.
One assesses affordability by comparing prices with disposable income.
The other considers the case for investing in housing by comparing prices with rents.
If these ratios are higher than their historical averages property is overvalued; if they are lower it is undervalued.
On this basis, Canada’s house prices are bubbly whereas Japan’s are undeservedly flat.
America’s formerly stricken market has rebounded: house prices have risen by 12.1% over the past year.
But the recovery still appears to be sound, since prices remain undervalued against income.
A sharp rise in mortgage rates since May, on signs that the Federal Reserve will shortly slow the pace of asset purchases, may in any case temper the boom.
Britain’s recovery is built on shakier foundations.
House-price growth has picked up in recent months to 3.9% and is likely to accelerate further, even though valuations are still overstretched.
The market is being buoyed through a subsidy scheme that lowers funding costs for mortgage lenders and through special help for low-deposit borrowers.
Despite favourable valuations, Japanese house prices continue to fall, though at a modest 2.2%.
The worst-performing markets are in the euro area, notably in southern Europe but also in some northern countries.
The French market is also depressed.
Valuations remain stretched in Spain even though house prices have fallen by 30% since early 2008.
But the recent pick-up in the Irish market looks sustainable following a 49% price crash.
Brighter signs gleam elsewhere, especially in Germany, which avoided the pre-crisis frenzy.
Prices there have risen in the past year by 5.1%, which should bolster domestic demand and help support the economic recovery in the euro zone.
1.disposable income n.可支配收入，税后所得
Steady growth in disposable income is far from assured.
But the macroeconomic downside has been less disposable income.
But its wealth built on the backs of slaves.
Built on a swamp, lagos is fighting for survival.
3.pick up 捡起；得到；学会
Yet occupancy and rental rates have started to pick up for prime properties.
But global investment started to pick up in 2003 as asian countries ploughed more money into infrastructure.