Access the full text.
Sign up today, get DeepDyve free for 14 days.
Journal of Banking and Finance, 34
Regional Science and Urban Economics, 41
Economic Journal, 121
American Economic Review, 106
Tourism Geographies, 21
Urban Studies, 45
Journal of Banking and Finance, 37
Quarterly Journal of Economics, 124
GetGoldenVisa.Com (2019)
Portugal golden visa Vs. Spain golden visa: which one is better?
American Economic Journal: Economic Policy, 5
Economic Bulletin 1/2019 Banco de Espana
Journal of International Economics, 112
Journal of Urban Economics, 64
Journal of Money, Credit and Banking, 47
Journal of Housing Research, 7
Journal of Financial Stability, 6
Quarterly Journal of Economics, 125
The Quarterly Journal of Economics, 99
Journal of Money, Credit, and Banking, 58
Journal of Economic Literature
Critical Finance Review, 5
Journal of Financial Economics, 129
Journal of Urban Economics, 61
Journal of Housing Economics, 36
Journal of Political Economy, 99
Journal of Housing Economics, 38
Real Estate Economics, 35
Regional Science and Urban Economics, 29
Brookings Papers on Economic Activity
PurposeThe purpose of this paper is to provide perspective on whether and why global metro house prices have become more synchronized, and perspective on the limited implications of this for investing in international real estate.Design/methodology/approachThis paper reviews main findings from the literature on house price determination, reviews the emerging literature on global synchronization, and provides graphs to illustrate main points and trends.FindingsHouse prices have become somewhat more synchronized likely reflecting greater correlation in long-term interest rates and macroeconomic cycles related to trends in globalization and international portfolio diversification. Nevertheless, this trend has not been continuous, reflecting that house prices depend on other fundamentals, which are not uniform across areas. Theory and evidence indicate that the more common are fundamentals, the more synchronized are house price cycles and the more substitution effects may matter. Also, 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.Research limitations/implicationsChanges in international house price synchronization stem from variation in two categories of key drivers of house prices. The first are traditional supply and demand fundamentals. The second include international capital flows and immigration. Both sets of factors are sensitive to the economic environment and public policy. Increased synchronization of business cycles, the Euro currency union, and more common monetary policy strategies and tactics have fostered greater correlation of real interest rates across countries, which tend to increase house price synchronization. These effects can be amplified by the tendency for property owners to use extrapolative expectations of future house prices.Practical implicationsShifts in prospective returns and the synchronization of international property returns not only on arbitrage of general property price differentials but also on underlying factors driving those differentials. Investors need to be mindful of the risks that metro prices sometimes reflect bubble-builder dynamics that can give rise to over-shooting of house prices. Observing simple correlations and changes in those correlations does not do away with the need for careful analysis of property investment, and if anything, warrant analysis of both how and why one may observe changes in the extent to which international house prices is synchronized.Social implicationsDespite the rise of globalization and of new technologies, the author has seen substantial divergences in house prices emerge across gateway cities and metros in less vibrant areas within countries. These reflect not only the impact of stronger income and population in more tech, educated and global oriented cities but also changes in the demand for amenities toward more culturally appealing cities, often – but not exclusively in – warmer or coastal areas where the supply elasticity of housing is often limited. Further complicating investment decisions are potential shifts in housing or immigration policy that can notably affect the demand for housing.Originality/valueThe paper provides practical perspective on why different groups of international cities have seen their house prices become more sychronized. Nevertheless, increased synchronization has occurred within an elite set of major cities, but in an environment house prices have diverged across gateway cities and metros in less vibrant areas within countries. The paper helps investors make sense of some recent patterns and recent prospects for investing in international real estate.
Journal of European Real Estate Research – Emerald Publishing
Published: Apr 13, 2020
Read and print from thousands of top scholarly journals.
Already have an account? Log in
Bookmark this article. You can see your Bookmarks on your DeepDyve Library.
To save an article, log in first, or sign up for a DeepDyve account if you don’t already have one.
Copy and paste the desired citation format or use the link below to download a file formatted for EndNote
Access the full text.
Sign up today, get DeepDyve free for 14 days.
All DeepDyve websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.