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What's going on?
US house prices are soaring according to Tuesdays data prices are 6% higher than in April last year. However, theyre dragging their feet in the UK, only rising by 2% in June compared to last years levels. Crikey.
What does this mean?
Average prices of homes in Americas top ten cities rose by 6.2% in April compared to last year in the top twenty cities, growth was 6.6%. While its not as fast as in March, prices are climbing because demand for homes is outstripping supply, even as the cost of mortgages (a.k.a. the interest rate) rises.
Theres a more somber picture in the UK: Junes house price growth was the lowest in five years. Weak economic growth plus pressure on household budgets (rising oil prices mean energy costs are likely to rise, and workers wage increases are barely keeping pace with how quickly products prices are rising a.k.a. inflation) probably means price growth will remain low, according to Wednesdays report.
Why should I care?
The bigger picture: House prices and economic growth go hand in hand.
In the US, economic growth is firing on almost all cylinders. Also, companies are using tax reform to bring cash into the country from abroad creating jobs, which helps to increase the demand for homes. The opposite may be happening in the UK, where some companies are taking jobs out of the country likely reducing demand for houses.
For you personally: Slowing house price growth may dent consumer confidence.
People tend to have more confidence in the economy when house prices are flying whether theyre homeowners or not. In the UK, consumer confidence has taken a downward turn and less confident consumers spend less, which may result in slower economic growth. Consumer confidence is still pretty high in the US, though.
Originally posted as part of the Finimize daily email.
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