Constantly increasing prices in Pandemic, homebuyers have more difficulty. More than 100 experts polled by Reuters in August 2021 on eight major real estate markets, namely the US, Canada, UK, India, Australia, New Zealand, China, and Dubai, all think the price increase will cool down in the next two years. Although most central banks are expected to keep interest rates near record lows in 2022, house price inflation is still outpacing wage growth.
House prices will almost certainly rise further because of rising material costs
A lack of supply of affordable homes in many markets even before the pandemic, plus more owners looking to buy larger homes for work remotely. This makes it difficult for buyers, especially young people looking to own their first home.
A senior economist at Wells Fargo, said: “Higher house prices have eclipsed affordability despite falling interest rates. This has caused many people who want to buy a home to give up the game.”
More than 80% of experts say the condition will stay the same or get worse. Even half of these people think that this possibility will worsen.
A chief economist at Bank of the West, explains that there are many cross-currents affecting the housing market today. From fluctuating long-term interest rates to low affordability. unemployment, and lack of construction land. , with a low housing supply.
Housing affordability may not improve in the coming years until more supply becomes available
But even with current construction rates, the cost of building materials, labor. Lumber is more likely to drive home prices up than down.
Home prices in the United States, Canada, Australia, and New Zealand project to increase in double digits this year, then slow to single digits in 2022.
Outside of Dubai, home prices are in the US, Canada, UK, India. Australia all ranked out of 5 on a 10-point scale from cheapest to most expensive. New Zealand is ranked ninth, with home prices out of reach for first-time buyers.
For India, some experts expect house prices to fall. Affordability to improve in the country, despite plans for two rate hikes in 2022.
Nearly 40% of analysts say the biggest risk of falling home prices is when central banks end stimulus measures and the spread of new Covid-19 variants.
Other risk factors for the housing market over the next 12 months include slowing economic growth. Supply chain disruptions, high unemployment, and a return to full-time employment.
“House prices are rising at a moderate rate in the near term
But wage growth will not fill the gap as government stimulus programs end,” said a chief economist at Laurentian Bank.
A new variant that reduces the effectiveness of the vaccine could also force authorities in North America to re-impose widespread containment measures. Resulting in more layoffs and long-term unemployment than in previous pandemics. Slowing economic growth is also a risk of causing a serious decline in house prices.
However, a real estate expert also warned that, in the short term. If the epidemic situation in some countries continues to be complicated until the end of the third quarter of 2021. The sales of some real estate businesses will decrease.
In the long term, this is an opportunity for the real estate market. Because in order to promote economic growth. Public investment disbursement is being accelerated and more drastic by the government in the second half of 2021. Public investment projects, especially infrastructure development projects. Have a direct impact on the real estate market and will become its main growth driver in the future. When public investment promotion. Along with historically low mortgage interest rates, as well as the gradual loosening of legal bottlenecks. The real estate market will bounce back strongly as soon as the epidemic is under control.