Two years of the COVID-19 pandemic have meant significant changes in the global housing market. Many consumers have experienced financial changes, such as a job loss, being furloughed, or receiving additional government support.
In addition to this, the housing market was almost entirely closed for part of the pandemic, with transactions, mortgage lending, and housebuilding coming to a halt in many countries.
However, despite house prices initially falling, consumer confidence has rebounded. This, along with reduced supply, has put upward pressure on house prices around the world.
One report from Zillow shows that the US housing market is under immense pressure, The number of homes for sale fell last month and is now 48% below 2020 levels. This is pushing up house prices, which are now 32% higher than they were two years ago. Rents are also increasing.
The report estimates that a one-year lease now costs consumers almost $3,400 more per year than one signed two years ago.
Economists at Zillow predict that house prices will continue to accelerate throughout the spring, with value growth peaking at 22% in May, before gradually slowing by early next year.
Another report by Reuters shows a similar situation in the UK. In 2020, house prices jumped by 13.4% in one month, which is partly due to government tax breaks on buying homes.
This growth is widespread in advanced global economies, with the rates varying widely across different countries. For example, Canada’s housing market grew by 8.2% in 2020, Luxembourg’s by 14.5%, and France, Italy, and Denmark’s by approximately 2%.
These changes have been great for housing investors – many of them have seen great returns as the value of their properties have appreciated much faster than most other assets during these unprecedented times.
However, for many first-time buyers, price increases, along with fewer homes being available and rising interest rates, have made homeownership more difficult to achieve.