The pandemic slammed the brakes on housing markets worldwide…but only for a moment.
Sales rebounded across the globe, and are now accelerating so fast that housing bubble concern is back.
New Zealand, Canada and Sweden are most at risk, according to an analysis by Bloomberg. It crunched housing market data from the 38 member countries of the Organization for Economic Cooperation and Development. Bloomberg came up with a top 10 list.
Many of the countries have price-to-rent and price-to-income ratios well above the historical average. Some Canadian cities have even seen year-over-year price growth of more than 30 percent.
The United States, which has had sky-high housing prices, clocked in at No. 7 on the list.
Norway, the United Kingdom, Denmark, Belgium, Austria, and France were also included.
Pricing across the member countries hit a record in the third quarter of 2020. Now, when averaging the price-to-income and price-to-rent statistics across the 38 member states, unaffordability surpassed 2008 levels at the end of 2020.
“A cocktail of ingredients is sending house prices to unprecedented levels worldwide,” Bloomberg’s Niraj Shah wrote in a report. “Record low interest rates, unparalleled fiscal stimulus, lockdown savings ready to be used as deposits, limited housing stock, and expectations of a robust recovery in the global economy are all contributing.”
Shah added that there is likely to be cooling in the future rather than a sharper collapse.
Japan and Italy were the only countries in which the current price-to-rent and price-to-income ratios are below the historical average.
[Bloomberg] — Dennis Lynch