This is an excerpt from our most recent Economic Outlook report. To access the full PDF, please click here.
2024 has been a tumultuous year for geopolitics. Elections aplenty. Wars aplenty.
Has it been as dramatic for the world’s major economic regions?
To answer that question, I applied this final 2024 Zacks Macroeconomics Special.
In this piece, I review each region’s current status. To initiate that, I supply the latest annual real GDP growth scenarios, for each of the world’s major economic areas.
To create even more Zacks ECON reader interest in what is going on, I have also pulled together macro data on each of the world economic region’s major countries.
Within this, I present each analytic country unit using two major macro indicators.
- I supply the latest London Consensus Economics real GDP growth rates, running from last year (2023), thru this year (2024), and into the forecasts for next year (2025).
- I then consulted the St. Louis Fed’s FRED system, which offers Bank for International Settlements (BIS) financial data. The Bank for International Settlements (BIS) is an international financial institution which is owned by its member central banks
- This Basel, Switzerland-based multi-lateral bank supplies each major countries’ real residential property prices, in index form. With 2010 being an index level of 100.
To get underway...
Let’s upfront study the formal linkages between these macro terms (GDP and real residential property prices.
As macro students, we need to better understand how these macroeconomic health indicators relate to one another, and to other types of associated sub-macro indicators.
First, real GDP growth...
Real GDP growth is an excellent, widely-applied, indicator of overall economic health.
The growth rate of real GDP is the most often applied macro indicator — as an indicator of the overall health of any economy.
An increase in a real GDP growth rate is generally interpreted as a clean signal — that a given economy is doing well.
Broad, underlying aggregate demand has been shown to be expanding. This lifts that economy’s many internal suppliers, and increases its external trade flows.
How does a given residential housing market fit into real GDP accounting?
A housing market's demand/supply contribution to the overall level of real GDP comes in at around 15% to 18%.
This includes:
- Residential investment, which incorporates the construction of new homes, remodeling and brokers' fees, and
- Consumption spending on housing services, which incorporates rent and utilities
What positive feedback loops exist, with real GDP growth and a housing market?
The growth rate of any countries’ real Gross Domestic Product (GDP) growth rate, and a countries’ residential property prices, are indeed closely related.
Studies in Asia, Europe, and the U.S. revealed that median home prices correlate by as much as 60% to 95% with GDP per capita. In the long run, the growth trends of both cycles typically correspond to each other.
Similarly, when real GDP growth lifts smartly, a housing market internal to that country, tends to flourish.
This is because strong real GDP growth ultimately leads to:
- Higher worker wages
- Increased consumer confidence, and
- Better access to credit, which all increase demand for housing.
Image: Bigstock
The World's GDP Growth Rates & Home Property Markets
This is an excerpt from our most recent Economic Outlook report. To access the full PDF, please click here.
2024 has been a tumultuous year for geopolitics. Elections aplenty. Wars aplenty.
Has it been as dramatic for the world’s major economic regions?
To answer that question, I applied this final 2024 Zacks Macroeconomics Special.
In this piece, I review each region’s current status. To initiate that, I supply the latest annual real GDP growth scenarios, for each of the world’s major economic areas.
To create even more Zacks ECON reader interest in what is going on, I have also pulled together macro data on each of the world economic region’s major countries.
Within this, I present each analytic country unit using two major macro indicators.
To get underway...
Let’s upfront study the formal linkages between these macro terms (GDP and real residential property prices.
As macro students, we need to better understand how these macroeconomic health indicators relate to one another, and to other types of associated sub-macro indicators.
First, real GDP growth...
Real GDP growth is an excellent, widely-applied, indicator of overall economic health.
The growth rate of real GDP is the most often applied macro indicator — as an indicator of the overall health of any economy.
An increase in a real GDP growth rate is generally interpreted as a clean signal — that a given economy is doing well.
Broad, underlying aggregate demand has been shown to be expanding. This lifts that economy’s many internal suppliers, and increases its external trade flows.
How does a given residential housing market fit into real GDP accounting?
A housing market's demand/supply contribution to the overall level of real GDP comes in at around 15% to 18%.
This includes:
What positive feedback loops exist, with real GDP growth and a housing market?
The growth rate of any countries’ real Gross Domestic Product (GDP) growth rate, and a countries’ residential property prices, are indeed closely related.
Studies in Asia, Europe, and the U.S. revealed that median home prices correlate by as much as 60% to 95% with GDP per capita. In the long run, the growth trends of both cycles typically correspond to each other.
Similarly, when real GDP growth lifts smartly, a housing market internal to that country, tends to flourish.
This is because strong real GDP growth ultimately leads to: