The rate of return on housing
In this much talked about paper Jordà and al. using annual data on total returns for equity, housing, bonds, and bills cover 16 advanced economies from 1870 to 2015 find, among other interesting conclusions, that:
a) housing returns are less volatile but about at the same level as equity returns over a broader time span.
b) while equity returns across countries have become increasingly correlated, housing returns have not.
Arguably the most surprising result of our study is that long run returns on housing and equity look remarkably similar. Yet while returns are comparable, residential real estate is less volatile on a national level, opening up new and interesting risk premium puzzles
The Rate of Return on Everything, 1870–2015
Authors: Òscar Jordà, Katharina Knoll, Dmitry Kuvshinov, Moritz Schularick, Alan M. Taylor
From: University of California, Davis, Deutsche Bundesbank, University of Bonn
A more granular view
An IMF study of 44 cities and 40 advanced and emerging-market economies shows that house prices have started to move in the same direction at the same time and behave more like the prices of financial assets. They attribute this change to a) low interest rates; b) institutional investors and wealthy individuals’ need to find safe places to invest their money; c) the broadest synchronized growth surge since 2010.
For Home Prices in London, Check the Tokyo Listings
By: Claudio Raddatz Kiefer, Jane Dokko – IMF
