BIS suggests rising real estate prices merit more attention
Surging worldwide real estate prices may warrant closer attention, according to the Basel, Switzerland-based Bank for International Settlements.
Rising worldwide equity prices have overshadowed attention to real estate lending in recent years, as "real estate as a collateral" has been mostly responsible for bank losses, the BIS report said, according to Reuters.
"Experience indicates that, at least in those countries where price increases have been particularly rapid and prices are beyond or close to previous peaks, developments warrant close monitoring," the BIS report said, according to Reuters.
Reuters said the report noted that housing costs -- on an inflation-adjusted basis -- increased 9 percent in the United States from 1995 to 1999, but soared by more than 25 percent in Denmark, Finland, Sweden, the Netherlands and United Kingdom. Ireland exceeded those countries, with a price surge of 76 percent.
For commercial real estate, major U.S. cities, as well as Amsterdam, had at least 40 percent increases in that time period, while other, such as Madrid had doubled. Dublin, Ireland had a gain of 170 percent.
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