Panic Buying Homes Skyrockets Prices Globally

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Among the 37 wealthy countries that make up the Organization for Economic Cooperation and Development (OECD), real house prices rose by almost 7% between the fourth quarter of 2019 and the fourth quarter of 2020 — the fastest year-on-year growth in the past two decades. In an unexpected twist, the pandemic has benefited house prices. That's because governments around the world helped homeowners by temporarily banning repossessions and providing trillions of dollars of support for workers and businesses. Interest rate cuts kept mortgage repayments affordable in many places, while temporary reductions to purchase taxes in some markets spurred home buying. These measures cushioned the housing market from the coronavirus recession. But the pandemic itself has actually turbocharged prices. House prices in Britain surged 8.5% in 2020 despite the worst recession in more than three centuries. That's the highest annual growth rate since 2014, according to the Office for National Statistics. And it's not just the United Kingdom. In the United States, the number of sales of existing homes reached the highest level in 2020 since 2006, according to the National Association of Realtors. From Auckland to Shanghai, Munich and Miami, house prices appear to be defying gravity. In Germany, properties are selling within two weeks of being listed and brokers are struggling to secure listings, according to Michael Heming, master licensee for Fine & Country in Germany, Austria and Switzerland. "It's a very strong market and prices are going higher and higher," In Portugal, foreigners have been snapping up houses despite not being able to view the properties they're buying. Prices there jumped 6% in the fourth quarter of 2020 compared with the same period a year earlier, according to Knight Frank data. Despite having no visitors from traditionally strong buyer markets, such as Brazil, Britain, France and Belgium, the first three months of 2021 has already broken sales records, according to Charles Roberts, Fine & Country Portugal's managing partner. In India, prices have declined following a 6.9% slump in GDP last year, but transactions surged following the end of the first lockdown. "Covid led to activity coming back into the market," said Hitesh Oberoi, the CEO of Info Edge, which owns India's largest property portal, 99acres.com. "A lot of people want bigger homes," he added. "Many people felt that because the economy was tanking they would get good deals." In China, where house prices in "tier-1 cities" including Beijing, Shenzhen, Shanghai and Guangzhou rose by 12% on average year-on-year in March, "Beijing is more determined than ever to rein in property leverage," analysts at Societe Generale said in a note last week.