Slowing Housing Market Could Contribute to Lower Global GDP

MarketWatch reports that some economists believe the slowing U.S. housing market could drive the global gross domestic product to its lowest annual pace in 10 years.

“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.” the Oxford Economics researchers wrote.

The researchers said that while home values globally aren’t falling outright, the pace of expansion has stalled substantially, which has raised some alarm bells. “Moreover, high house price valuations point to a risk of prices falling in the quarters ahead,” Slater and Payne wrote. The economists say that retreat in prices could spill over to the rest of the globe.

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