Trends and convergence in global housing markets

This study evaluates the degree of convergence among the housing markets of 10 major economies across North America, Europe and Asia. Long-run results indicate that the housing markets have become increasingly interdependent over time and more so after the onset of the most recent housing crisis. Short-run analysis suggests that the global housing markets have become more susceptible to shocks emanating from the U.S. over the crisis and the post-crisis periods in comparison to the pre-crisis period. However, the U.S. housing market is found to be highly exogenous and the global “leader” since it is influenced primarily by its own innovations and is not affected reciprocally by shocks originating from the international housing markets. Finally, the study shows that the trends and co-movements among global housing markets can be attributed to real convergence.