Housing slump could cut world growth to decade-low

摘要

1. A combined slump in house prices and housing investment in the major economies could cut world growth to a 10-year low of 2.2% by 2020 - and to below 2% if it also triggered a tightening in global credit conditions. 2. In such a scenario, inflation would remain well below target in the main economies, and US Fed rates would be up to 100 basis points lower than in our baseline by 2021. 3. Signs of a global house price downturn are already visible, with around a third of our sample of economies seeing falling prices and world residential investment starting to decline. High house price valuations add to the risk that this downturn will deepen in the coming quarters, hitting consumer spending. 4. Using the Oxford Global Economic Model, we find that a 10% fall in house prices and an 8% fall in housing investment both cut growth by around 0.3%-0.4% across regions. Adding a sharp Chinese downturn, such as that seen in 2015, has a large additional impact on growth in Asia.