After the coronavirus pandemic, housing prices in almost all major economies have risen, forming the broadest rebound in more than 20 years and renewing economists’ concerns about potential threats to financial stability.

An analysis by the British Financial Times found that out of the 40 countries covered by OECD data, only three countries experienced real house price declines in the first three months of this year—the smallest percentage since the start of the data series in 2000 .

Analysts say that historically low interest rates, savings accumulated during the lockdown, and people’s desire for more space when working from home are all contributing to this trend.

Claudio Borio, the head of the Ministry of Currency and Economy, said that in the short term, rising house prices may “be a good thing for the economy, because people who already own houses feel richer and because of assets Valuation, they can spend more money”. In the Bank for International Settlements, the central bank’s bank.

However, if it continues, it may turn into an unsustainable boom, which may eventually promote a “reversal” of economic activity, especially when accompanied by a strong credit expansion, he warned.

Price growth rebounded

As the economy rebounded from the severe recession triggered by the coronavirus last year, the annual growth rate of house prices in the OECD Group of Rich Countries reached 9.4% in the first quarter of 2021, the fastest growth rate in 30 years.

Deniz Igan, deputy director of the Macro-Financial Department of the International Monetary Fund’s Research Department, pointed out that “the growth of house prices in most parts of the northern hemisphere has been strong in the past year”.

National data shows that the broad trend in the second quarter continues.In the U.S., house prices have risen Their fastest annual interest rate Nearly 30 years in April.

Countries such as the United Kingdom, South Korea, New Zealand, Canada and Turkey continue to grow strongly.

Enrique Martínez-García, senior research economist at the Federal Reserve Bank of Dallas, said there are signs of a “housing fever” in some countries. He attributed this development to fiscal and monetary stimulus during the pandemic.

Why will the price rise?

Borio said that during periods of weak economic activity, “extremely accommodative financial conditions” and record low interest rates helped boost housing prices at an unusually fast pace.

Relative to rent and other investments, lower borrowing costs make buying houses more affordable.

In addition, many families, especially those who have become wealthy, have accumulated Large savings Since the beginning of the pandemic, expenditures have been restricted due to the blockade, and some jobs have been protected.

Martinez-Garcia said: “A lot of this extra income is allocated to the real estate market.”

At the same time, after staying at home for a long time during the lockdown, more people decide to move, usually to a larger house in a quieter place. They flood into the real estate market, which has been dominated by the pent-up demand of families who have delayed moving.

According to Mathias Pleissner, an economist at the rating agency Scope Ratings, this situation is “intensified by insufficient supply and rising construction prices.”Building inventory has decreased Global supply chain Under pressure, the cost of steel, wood, copper and other materials has risen rapidly.

Brett House, deputy chief economist at Scotiabank, warned that “the structural imbalance between supply and demand[in housing inventory]… This will only heat up in the next few months.”

Is it a bubble?

The OECD’s average house price growth rate is faster than income growth, making housing unaffordable. They are also rising faster than rents.

According to Adam Slater, chief economist of the Oxford Economics Institute, the value of real estate in advanced economies is overvalued by about 10% compared with the long-term trend. He calculated that this made this boom one of the biggest since 1900—although it was nowhere near as big as it was before the financial crisis.

However, he also pointed out that some of the factors pushing up prices are temporary, such as government tax incentives and pandemic-related economic chaos, including Global supply chain Caused by port delays.

He stated that credit growth was lower than before the global financial crisis, which indicated that “compared to 2006-2007, the risk of bankruptcy is lower.”

The growth of mortgage loans is mainly driven by people with good financial status. Household debt in most developed countries is lower than before the financial crisis. This indicates that the situation will follow a wave of defaults and sell-offs and follow the same path. Low, Egan argued at the International Monetary Fund.

One key factor is different from what it was almost 15 years ago: The central bank, scarred by the last housing bubble burst, is now more vigilant.

The Reserve Bank of New Zealand increased House price In fulfilling its responsibilities, the European Central Bank has requested the EU statistical agency Including price In its headline inflation calculation.

Bank of America economist Aditya Bhave said that policymakers around the world “are now keenly aware of the risks of housing policy.” He added that compared with 2008, this “significantly reduces the likelihood of adverse results.”