According to the Bureau of International Settlements (BIS), real residential housing prices increased in advanced economies at a rate of 9.2% yoy in Q3 2021, the highest pace in the series’ limited history (calculated since 2008), before slowing to 8.1% in the 4th quarter. The United States stood out with real house price growth of 11.5% and 11% over the same period.
In general the iinflation on the prices of housing it fluctuates from the record highs recorded in the United States to the very low levels observed in China and in some emerging countries. In the hottest markets, prices are currently really high on both sales and rents. However, some of these increases are a side effect of switch to work remotely and prices are more likely to flatten out in the future than to collapse.
From a recent analysis carried out by Bank of America it emerges that the current trend of upside of the pricesvery strong in some markets, is driven by common factors such as low loan rates and “Race” to create home spaces for smart working. The increases in New Zealand and the United States are significant, while in China, for example, there is a cooling of the market and the discouragement of speculative operations. The same dynamic was observed in Emerging Countries, where the growth in house prices was only 1.9% in 2021 on an annual basis.
between i fundamental appear in worsening, Bank of America experts say they are reluctant to predict a vertical collapse in house prices globally. There are four main reasons: first of all, the weakening could occur in some markets but not in a synchronized manner everywhere; history suggests that after economic booms there is a phase of weakness and not of collapse; the housing boom was short lived and was not favored by “easy” credit; fourth and last factor, the change in post-pandemic work dynamics and the need for new living spaces ready to keep housing values high.
In short, the probabilities that there is a new one bubble real estate like the 2008 American one, they really appear minimum. Although the global economy is moving into a delicate phase and there are many clouds on the horizon, these should not lurk on real estate. Then there is always the opportunity to invest in a not very dynamic asset such as real estate (as shown by this analysis focused on the Italian market), but this is definitely another matter.