How have home prices reacted to massive central bank balance sheet expansion? Its not the same all over the world.
First, we will look at the USA. The Case-Shiller National home price index is now far above the peak of the price bubble in 2005 thanks to the massive expansion of The Fed’s balance sheet. Particularly since the Covid crisis.
As Wim Grommen and Holger Zschaepitz have noted, German home prices have skyrocketed with the ever-increasing European Central Bank balance sheet.
But what about Italy? Given their banking crisis, Italy’s home prices have been falling since the global financial crisis before leveling-off.
France? French home prices have rising steadily.
Spain? Like Italy, Spain has a massive home price bubble that burst and has been on the rise only since 2014. But at no where the pace of Germany’s home price growth.
UK? Similar to the USA where both suffered a home price bubble and consequent rise with Central Bank Zero-interest rate and Quantitative Easing policies.
Japan? Japan had a massive bubble before the global financial crisis which exploded. But even with Japan’s legendary negative interest rate policies and massive balance sheet expansion, Japan’s home prices are declining … again. My-my-my-Kuroda!
So home price growth is rapid in the USA, the UK and Germany and less so in France. And positively lousy in the Mediterranean countries and Japan.