Major housing markets tipped to shine this yearOverseas Property | Shrutee Sarkar 4 Feb 2021
The outlook for major global housing markets is brighter than previously thought due to expectations for a broad based economic recovery and easy monetary policy, with only a low risk that a Covid-19 resurgence will derail activity, a Reuters polls showed.
Over 100 million people have been infected by the coronavirus, leading to a healthcare crisis and deep economic recessions, but fiscal and monetary stimulus and the rollout of vaccines mean the global economy is set to recover this year.
While already high unemployment caused by the pandemic is expected to rise further, the January 15 to February 1 poll of over 130 property market analysts showed average home prices would rise this year and the next in most countries polled.
That compares to largely pessimistic predictions made in September.
"A solid economic recovery bolstered by more fiscal stimulus, still-low mortgage rates and unmet demand should continue to prop up home sales and construction in 2021," said Gregory Daco, chief US economist at Oxford Economics.
Three-quarters, or 77 of 102 analysts, said that the risk of a Covid-19 resurgence derailing housing markets this year was low.
Although the US economy contracted last year at its sharpest pace since the Second World War, it had little bearing on housing market activity.
"The recent Covid-19 surge has not had any noticeable impact, with transactions near record high levels despite record high case growth," said Brett Ryan, senior US economist at Deutsche Bank.
"Pent-up activity from Covid-19-shutdowns earlier in the year will soon start to wane and transactions will likely normalize. More housing supply will come online as vaccination picks up at the same time that base effects will start to roll off."
When asked about the primary driver of housing market activity this year, over 55 percent of respondents, or 57 of 101, chose an economic recovery and easy monetary policy.
Of the remainder, 20 analysts named a desire for more living space and 18 said a successful vaccine rollout, while six chose fiscal stimulus.
Australian and Canadian house prices were expected to rise significantly this year and next, helped by low mortgage rates and massive fiscal spending.
When asked what was more likely for housing market activity, 58 of 100 respondents said an acceleration. The others expected a slowdown.
Those views were swayed by a somewhat modest outlook for the British, Dubai and Indian housing markets compared to the rest.
Indian house prices were expected to barely rise this year despite an economic recovery and supportive policies and Dubai house prices were predicted to fall at a slower pace this year and next. British house prices were forecast to flatline this year.
"While we expect a strong start to the year, we expect momentum to wane following the end of the stamp duty (property sales tax) holiday in April," said Aneisha Beveridge at estate agents Hamptons International. "Towards the end of the year the housing market should settle."