Global Housing Market Update

This table from The Economist shows average house prices in Developed and Bric countries compared to their respective income and rent levels. House prices in Hong Kong, Canada and New Zealand are most overvalued. While house prices in Japan are highly undervalued. Also, the graph shows that Hong Kong saw the highest average price increase over the last year. The Netherlands had the biggest decline.

Due to a request by the Economist this graph has been removed. 

View the graph here

History of Credit Bubbles

This chart shows a historic overview of several financial bubbles. From the Tulip Mania in the 1630's to the Real estate Boom that ended in the late 2000's. This research was provided by Goldman Sachs.

Click on the picture for a bigger version.

ZeroHedge

Global House Price Indicators (January 2013)

The Economist posted this overview of global house price indicators in January 2013. Some points of interest:

• Hong Kong saw the biggest rise in housing prices: 22 percent compared to year ago, while Spain saw its house prices contract the most.
• Hong Kong was also the country that saw its house prices increase the most after the start of the global financial crisis in 2007, while Ireland saw the biggest correction; house prices were slashed in halve. 
• Housing markets in Canada and France are most overvalued according to rent and income measures, while those in Japan and China are quite undervalued compared to their long term average values.

The Economist

Household Debt Versus Disposable Income (1995-2011)

This graph gives the ratio of total household debt divided by the total of disposable income of the households in countries of the Euro Area and the USA. On average the household debt to income rate was relatively stable in the Euro Area approaching the 100 percent just before the credit crisis from around 70 percent at the beginning of the Euro. The household debt to income ratio was already higher in 1999 in the USA and saw a much bigger increase, but unlike in the Euro Area the ratio has come back quite a lot already in the United States.

The average of around 100 percent currently in the Euro Area is mainly formed by the bigger economies: Germany and France, who have a ratio close to the Euro Area average. There are notable outliners, especially Denmark, The Netherlands and Ireland that have a way bigger ratio of 200 to almost 300 percent.

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Housing Bubbles in U.S., Spain and Ireland Compared

This awesome tool from The Economist let's you compare house prices around the world. As you see house prices in Ireland rose the most relatively between the three countries. For Ireland and the U.S. house prices have corrected quite significantly already. In Spain it seems, the worst is yet to come for the decline in prices.

Via the link you can compare some other countries yourself.

The Economist

House Prices Versus Disposable Income (1993-2011)

This chart shows the development of the house price-to-disposable income ratio for several countries, with the long term average set as 100. Ireland had the biggest housing bubble (in terms of prices to income). Spain was really close to Ireland and the ratio is still higher for Spain, while Ireland already got back to its long term average.

Especially notice the Netherlands, which is still really high on the scale and France, which is rising again after the decline. Also notice the United States which, according to this measure, should not have a housing bubble anymore.

How Fannie Mae and Freddie Mac Work

This chart shows how Fannie Mae work and how it put more liquidity into the housing market. It does that by taking mortgage loans from banks in exchange for cash. That way banks can give out more mortgages. A big factor in this process was the fact that Fannie and Freddie were charged a lower interest rate than private institutions when borrowing money from the debt markets. In other words, these two government sponsored entities were perceived as having a lower risk.

NYT

Especially since the eighties with the mortgage-backed securities getting more and more popular this process gained momentum. In the next graph you can see the holdings of mortgage debt outstanding by type of institution. In the eighties and nineties holdings of mortgage debt by Fannie and Freddy (Agency- and governmentsponsored enterprises) exploded.

EconBrowser

11 Million Homes 'Under Water'

This nice graph from Credit Sesame shows the percent of homes per state for which the value of the home is lower than the mortgage being taken on it. Since house prices started to fall many households came into problems because selling their house would mean going broke. This is called a negative equity.

Click on the graph for an interactive version.

Credit Sesame