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Bloomberg: Why a Housing Cool-Off May Leave Consumers Unperturbed This Time

As the $220 trillion global housing market starts to cool off in some places against a backdrop of monetary policy normalization, economists at Eurizon SLJ Capital offer a reason for calm. Because price declines are hitting extremely expensive cities, they might not drag down consumption the way standard theory would predict.

“Modest declines in property prices in Mumbai, Hong Kong, Shanghai, London and even New York City may not lead to a significant weakening in consumption,” write Stephen Jen, CEO of the London-based hedge fund, and economist Joana Freire. That’s good news, because they think global property prices may have peaked for the cycle, noting that they’re in decline in London, New York, Stockholm, Hong Kong and many other cities.

“Since property prices had gone too high, the incipient price correction — assuming it remains modest and gentle — may perversely lead to an increase in consumption,” they write.

Read the original article on the ‘Bloomberg’ website.

Posted on the 14/11/2018 at 9:49am by Admin.