World housing prices

A recent report indicated housing prices are still falling in the United States. But are we alone? What have housing prices been doing in other countries? N.C. State University extension economist Mike Walden responds.

“Of course … what is happening to housing prices is really key to the economy. Many economists think we have to get housing prices stabilized and probably going up a wee bit before we really get a strong economy. So this is absolutely crucial.

“But the point of today’s program is to show we are not alone here. If you look around the world, housing prices have been falling in virtually every country. The countries with the biggest drops include our country, but also Ireland, Denmark, Singapore have had drop in housing prices comparable to ours.

“Now there are a few countries that have actually experienced gains in housing prices. Among them are China, Sweden and Australia. But for the most part, we have gone through a period over the last decade to 15 years where we first had an international housing boom — and that really allowed the world economies everywhere to go up very dramatically. And then unfortunately we had what is now known as the housing bust, where those prices just as rapidly came down and actually went into negative territory in terms of rates of growth.

“That’s what I think caused all the problems in the banking system, because obviously banking is directly related to making loans for home buyers.

“And so what this says — I think, and it is very important for our policy — is whatever caused this housing boom and housing bust was really a worldwide phenomenon and not specific to any individual country.”