Global housing booms in decades

Written by
Erin nicole davis

While the headlines have been talking about the pandemic-induced housing boom in Canada for nearly a year, it turns out that we are not alone on the frontlines of the housing frenzy.

According to data from the Organization for Economic Co-operation and Development (OECD), the housing market in almost every major economy is booming, from South Korea to New Zealand.

Real house prices increased by 7% on average in the OECD area between the fourth quarter of 2019 and the fourth quarter of 2020, the fastest year-over-year growth in the past two decades. And that raises eyebrows, like “are we or are we not in a bubble?” the debate is gaining momentum in online jokes.

Looking at longer-term trends, real house prices rose in 32 countries between 2005 and 2019, with Colombia, Canada and Israel recording the largest increases (over 80%) during this period. period. At the same time, six countries recorded a drop in real house prices over this period, the most significant in Greece and Italy (over 20%), according to the OECD.

READ: GTA Home sales down from last year, still well above average

Focusing on the evolution of real house prices between 2019 and 2020 to assess the impact of the COVID-19 pandemic, real house prices have increased in all but two countries. “In several countries, the growth in real house prices between 2019 and 2020 was significant: 13% in Luxembourg, 9% in Turkey and 7% in Estonia, Germany, Poland, Portugal and the Slovak Republic. Japan and Ireland experienced stable real house prices between 2019 and 2020, ”the report reads.

According to an analysis by the Financial Times, the data shows that of the 40 countries analyzed, only three saw house prices in real terms fall in the first three months of 2021. In addition, the annual growth of prices in the OECD area reached its fastest pace in 30 years. in the first quarter of the year, reaching 9.4%.

The countries with the strongest growth are Canada (no surprise there), Turkey, South Korea, the United Kingdom and New Zealand. Across the OECD, housing costs are rising more than incomes and rents.

Speaking of the rental market, rental prices increased in all but two countries between 2005 and 2019. Turkey, Lithuania, Iceland and Estonia recorded the largest increases (over 100%) in the past. during this period. Japan and Greece are the only two countries to have experienced a drop in real rents since 2005; however, in Greece, the drop in rental prices was much smaller than real house prices (-10% vs. -31%), according to the report.

After dropping noticeably in many cities at the start of the pandemic, rents are on the rise again in Canada.

On the housing market side, the reasons for the rise in temperatures and prices in the main global real estate markets are fairly standard: low interest rates, increased savings during confinement and the need for more space to live. . In addition to the limited supply over the relative demand of major markets, the pandemic has also put pressure on construction industries and supply chains, raising the cost of materials like wood, steel and copper. , like Financial Time strong points.

Whatever the cause, the outcome is inevitable: compared to generations past, families today pay much more for a half-decent roof over their heads, in Canada and around the world.

Written by
Erin nicole davis

Erin Nicole Davis is a born and raised Toronto writer with a passion for the city, its urban affairs and its culture.

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