Housing boom goes global
Thursday 28 October 2004
For the first time a house price and spending boom is international - affecting New Zealand, Australia, the United States, Britain, Spain and other European countries at the same time.
By The LandlordHousehold debt levels are much higher than in the past and house prices are high compared with incomes - arguably more overvalued in many countries than ever before.
The Economist magazine recently argued that US consumer spending was driven by high home prices rather than higher incomes, but some of that wealth was simply "phoney".
Higher house prices did not mean an increase in productive resources - allowing Americans to earn and spend more.
And homes are a big part of living costs.
The "wealthier" home owners would be offset by "poorer" home buyers or renters struggling to save more to buy a home.
"Society is no better off," The Economist says.
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