House price increases have accelerated to an extraordinary extent in many countries in Europe, in Asia-Pacific, and in the U.S. and Canada. Low interest rates and monetary easing must be assumed to be the main causes.
During the year to Q1 2021:
- Real house prices (i.e., prices adjusted for inflation) rose in 43 out of the 57 world’s housing markets which have so far published housing statistics. The more upbeat nominal figures, more familiar to the public, showed house price rises in 50 countries, and declines in only 7 countries. North American housing markets are booming.
- In the U.S., the S&P/Case-Shiller seasonally-adjusted national home price index rose by 10.28% during the year to Q1 2021 (inflation-adjusted), a sharp increase on the previous year’s 2.94% growth, amidst strong demand and construction activity buoyed by very low interest rates and massive government stimulus spending.
- Likewise in Canada, house prices in the country’s eleven major cities rose by 8.39% during the year to Q1 2021, up from the previous year’s 2.92% growth, thanks to a strong rebound in demand amidst improved economic prospects.
- Europe’s house price boom is strengthening further. House prices have risen in no less than 23 of the 26 European countries for which figures were available during the year to Q1 2021. Standouts included Montenegro (house prices up 28.7%) Slovak Republic (up 14.38%), Sweden (up 11.28%), Germany (up 9.59%), Netherlands (up 9.22%)….not to mention Turkey (up 13.59%) – where high inflation was a complicating factor.
The strongest housing markets in our global house price survey during the year to Q1 2021 included: Montenegro (+28.7%), Puerto Rico (+23.68%), Egypt (+22.61%), New Zealand (+22.39%), and Sri Lanka (+15.93%), again using inflation-adjusted figures.
While some of these figures can be explained by weak national statistical capacities, others simply reflect an extraordinary boom, for instance New Zealand, where median house prices rose by a whopping 22.39% during the year to Q1 2021.
South Korea’s housing market, usually so stable, saw housing prices rise by 9.44% during the year to Q1 2021, compared to the previous year’s 0.7% growth and its highest growth in 14 years.
Taiwan’s housing market saw nationwide house prices rising by 9.43% y-o-y in Q1 2021.