The International Monetary Fund (IMF) recently revised its 2021 global economic growth forecast to 6%, up from an initial 5.5% estimation in January. This is due to an accelerated vaccine distribution combined with government stimulus efforts in many countries.
Contrary to expectation, house price growth has accelerated remarkably in countries in Europe, Asia-Pacific, the USA and Canada. Analysts view the magnitude of this boom as utterly unprecedented, especially when compared to previous economic downturns and is largely attributed to be driven by low interest rates and monetary easing.
Real house prices (i.e. after adjustment for inflation) rose in 43 out of 57 global housing markets which have published housing statistics according to globalpropertyguide.com. In nominal terms (i.e. before adjustment for inflation), only 7 out of 50 countries showed house price declines.
North American housing markets are booming. In the USA, the S&P/Case-Shiller seasonally-adjusted national home price index rose by 10.28% as at the first quarter of 2021, up sharply from last year’s 2.94% growth. This is due to strong demand and construction activity boosted by the low interest rate and massive government stimulus spending.
The Federal Housing Finance Agency’s seasonally-adjusted purchase-only U.S. house price index shows similar results with growth of 10.54%, the highest annual growth ever recorded.
In Canada, house prices in the country’s eleven major cities rose by 8.39% during the year to the first quarter of 2021, a massive uptick compared to the 2.92% growth of the previous year. This is attributed to strong rebound in housing demand amidst improved economic prospects.
European countries which show strong house price surges include Montenegro, Slovak Republic, Turkey, Sweden and Germany.
The best performing house prices in the Asia-Pacific housing markets include New Zealand, Sri Lanka, China, South Korea, Taiwan and Japan.
A surprise turnaround in house price growth is also reported in Egypt, Puerto Rico and Pakistan according to globalpropertyguide.com.
South Africa is still lagging many international markets. According to Lightstone, house prices have continued to increase during the first half of the year with nominal growth and currently stands at around 5.75% nationally. The lower price segments continue to show stronger growth at 6.5% on average.
South Africa’s regional house price growth table is topped by the Eastern Cape (8.3%) and northern areas such as Mpumalanga (7.6%), North-West (7.5%) and Limpopo (6.7%), followed by Free State (6.2%). The Northern Cape and KZN both stand at 5.1% and Gauteng and the Western Cape at 4.8%.