A Cyprus financial paper had this article today about how the United States and Europe’s housing prices have mirrored each other in the past. Europe tends to lag slightly in the reaction to housing news in the United States.
The article is very informative but I was unable to determine where it came from, so read at your own risk but this time I think it is worth it. 
Real house prices in the US and the Eurozone rose about 30% between 1970 and 2000, and added another 40% in both regions over the last seven years alone. Price-to-rent ratios revealed a similar picture. House prices and rents advanced at a similar pace in both regions until about 2000. Since then, house price developments started to outpace the increases in rents. Since fundamental factors determining housing supply and demand should affect house prices and rents in similar ways, the observed increase in price-rent ratios in the US and the Eurozone suggests that houses became overvalued in both markets. Affordability ratios, which seek to capture the interplay of movements in income, lending rates and house prices also confirm that house prices have moved out of line with income developments in both regions. Thus, housing affordability has deteriorated to a very similar degree in both the US and the Eurozone.
In short, the housing markets on both sides of the Atlantic are highly synchronized and if a house price bubble developed in the US, one also exits in the Eurozone. read the rest at the Financial Mirror
No related posts.
