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April 12, 2018 | IMF: Synchronous asset bubbles risk synchronous global bust

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel ( Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog:

The International Monetary Fund has stepped up its warning on the economic and social risk of the synchronized housing bubbles that have billowed around the world on QE-driven mania, particularly since 2013.  You can read their April report here:  Global Financial Stability Report April 2018.

Some key takeaways are summarized in this article, see Sydney, Melbourne house prices are now global, IMF warns

“…during the past three decades house prices have become increasingly synchronised across countries, especially among major cities.

“Thus, policymakers cannot ignore the possibility that shocks to house prices elsewhere may affect domestic markets.”

“Increasingly, house prices have become determined at the global level,” the IMF said in the report.

“…a decline in external demand may exacerbate the challenges of stabilising household balance sheets, financial markets, and economic activity…

Worryingly for investors who like to believe houses are “always safer than stocks”, the IMF report cautions that “the dynamics of house prices are similar to those of other financial assets”.

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April 12th, 2018

Posted In: Juggling Dynamite

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