Home truths from IMF on property price threat

A visitor to a housing exhibition in Shanghai in April inquires about a property project. The IMF's new global house price index showed that 33 out of 52 countries, including China, experienced increases in housing prices over the past year. Lai Xinlin / For China Daily

Monetary fund says systemic crisis could follow 'unsustainable' boom

The International Monetary Fund issued a warning on Thursday about an "unsustainable" housing boom.

The agency also launched a new index that tracks developments in the global housing market, in an effort to avoid the boom-bust pattern in house prices that it said preceded more than two-thirds of 50 recent systemic banking crises.

The Washington-based fund's new global house price index showed that 33 out of 52 countries, including China, experienced increases in housing prices over the past year.

"While a recovery in the housing market is surely a welcome development, we need to guard against another unsustainable boom," Zhu Min, the IMF's deputy managing director, wrote in a blog post on Thursday.

The ratios of house prices to rents and incomes are often used as an initial check on whether house prices are out of line with economic fundamentals, Zhu wrote.

And those ratios remain well above the historical averages for a majority of the Organization for Economic Cooperation and Development countries, including Australia, Belgium, Canada, Norway and Sweden, where a series of house prices, rents and incomes over a number of years is available.

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