IHS Markit (INFO), a world leader in critical information, analytics and solutions, today announced the release of their House Price & Credit Crunch Scenario Report, examining the potential global economic impact of a collapse in housing prices.
Major economies in Asia-Pacific, Europe and parts of Canada have experienced housing price increases of over 40 percent since 2010, far outstripping wages and inflation and often supported by dynamic foreign investment into domestic real estate markets. With a possible reversal of capital flows, this leaves many markets at significant risk of a collapse in housing prices. Countries not experiencing housing price inflation are also potentially at risk from contagion effects of collapse in key end-markets; with the housing price falls translating into declines in total fixed investment and trade flows.
“Given banks’ high mortgage portfolios, a collapse in housing prices would severely impact credit conditions as non-performing loans’ rates would spike up,” said Elisabeth Waelbroeck-Rocha, chief international economist, IHS Markit. “This would trigger a credit crunch, whose implications could far exceed those of a protectionism-driven trade contraction. Some countries like Australia have already seen a reversal of price trends, but an outright collapse in property prices in key economies could trigger contagion which would severely undermine global growth.”
Leveraging IHS Markit’s proven and comprehensive Global Link Model, covering 68 countries and 95 percent of global GDP, the report details the drivers of the housing price boom, identifies potential causes of a collapse in prices and quantifies the impacts of that downturn to global economies.
To learn more about the House Price & Credit Crunch Scenario Report, or to learn more about IHS Markit’s scenario capabilities click here.
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IHS Markit (INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.
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