- A year ago, there were predictions of doom and gloom as the pandemic took hold
- Despite deep economic recessions, richer (OECD) countries have had property booms
- Amid vaccine roll outs and easing restrictions, property markets should continue to grow, say the experts
A year ago, global forecasters were predicting house price falls of 30% or more. People were bracing for the worst, as the pandemic sent billions into lockdown, and the world stopped for a few weeks, or months.
Businesses were shuttered, or put on government life support, as hospitalisations grew and a global recession hit.
In past economic downturns, house prices fell… except not this time.
Real quarterly house price index, OECD Average 2000-2020
As can be seen from the graph, the average OECD (37 wealthiest, developed countries) real quarterly house price index rose 6.7% in calendar year 2020, the largest growth in the past twenty years.
Covid has, strangely, boosted house prices, and not just in Australia.
Recessions, meet the property boom
Low interest rates, government stimulus boosts and people stuck at home looking at their (perhaps tired) properties has created a perfect storm of momentum towards the property market. Pent up demand – and pent up people – have gone out and bought, as soon as they were able, more confident and willing to do so. Price rises have followed.
Over in the UK, there were 180,000 house sales in March, double the normal number. Amid the worst recession in three centuries, house prices rose 8.5%, the highest growth rate since 2014.
In the US, house prices rose 9% in 2020. In New Zealand (where property prices are rising +24% annually), China, Germany and elsewhere, property markets are booming, so much so that the discussion now is more around how long will it last, will it all get out of control, and what should central banks to do rein it all in?
So will it fall in a heap? Probably not, say the analysts.
“Global economic growth is projected to be much stronger this year, as vaccines are rolled out and lockdown restrictions ease, which will be supportive of housing markets,” said the CNN Report. “Crucially, interest rates are expected to remain low.”
For those in property, let the good times roll.