1. Global Perspectives on Housing Markets Richard Koss International Monetary Fund February 17, 2016 Presentation for the 2016 Annual Meeting of International Housing Association 1 THE VIEWS EXPRESSED IN THIS PRESENTATION ARE THOSE OF THE PRESENTERS AND SHOULD NOT BE ASCRIBED TO THE IMF OR IMF POLICY.

2. Major Themes 1.This Economic Recovery is Fundamentally Different 2.House Prices are Rising in Many Areas Despite Sluggish National Economies 3.The Fallout from Low Commodity Prices has yet to be Broadly Felt 2

3. This Economic Recovery is Fundamentally Different 1.Fallout from the financial crisis has been a key factor behind slow growth in much of the developed world 2.China’s growth is slowing as it transitions to a new economic model 3.Deflationary headwinds have driven many central banks to the zero lower bound, and below 3

4. This Time is Different – Slower Trend Growth 4

5. This Time is Different – Negative Real Rates 5

6. House Prices are Rising in Many Areas Despite Sluggish National Economies 1.Low interest rates are fueling demand for housing as an investment vehicle 2.China’s price increases in tier-1 cities seem associated with expectations of continued fast income growth 3.Price increases in many areas are raising concerns about affordability 6

7. Housing demand in the US has increased modestly in line with overall economic growth 7

8. Housing supply, however, continues to make slow progress 8

9. Sluggish Supply in the Face of Modest Demand is Fueling Price Increases in the US 9

10. There is Significant Geographic Dispersion in the Housing Recovery 10

11. Which in Turn Drives Growing Concerns about Affordability 11

12. Chinese House Prices Have Risen Rapidly, and are Very Volatile 12 Source: Joe Gyourko, Wharton School, “Chinese Housing Markets: What We Know and What We Need to Know “

13. 13 Prices are Rising Faster than Incomes to Varying Degrees in China Chinese House Prices Have Risen Rapidly, and are Very Volatile

14. 14 Source: Joe Gyourko, Wharton School, “Chinese Housing Markets: What We Know and What We Need to Know “ There is a Great Deal of Regional Differentiation in House Prices in China

15. 15 Source: Hanming Fang, University of Pennsylvania “Demystifying the Chinese Housing Boom” China’s Recent Experience Mirrors that of Other Countries Experiencing Fast Growth

16. Longer-Term Patterns Seem to be Breaking Down 16

17. The Fallout from Falling Commodity Prices has yet to be Broadly Felt 1.Historically, falling commodity price have had a more significant impact on local housing markets than for countries as a whole 2.House price impacts from supply shocks tend to be less damaging than from demand shocks; at present we seem to be experiencing both 17

18. House Prices in Houston Lagged the US during the Bubble, but have Risen Sharply Recently 18

19. House Prices in Calgary are Losing Momentum 19

20. Thank you… 20