As the dust settles from the COVID-19 pandemic, the housing market is on the rise – with no end in sight.
A little over a year ago, the coronavirus pandemic began and life was put on hold. Large portions of the world were sent into lockdown, shuttering businesses, costing tens of millions of workers their jobs, and putting the housing market at a standstill. Real estate experts were bracing for the worst. Many homeowners started asking lenders for more time on their mortgage payments as this global recession hit. Around this time last year, people thought it was going to be 2008 all over again, fearing that house prices would collapse as they did in past economic downturns. With major increases in bankruptcies and unemployment, the fear became not being able to keep up with mortgage payments with disposable incomes being squeezed to nothing. But even after all that fear of history repeating itself, none of that took place.
Instead, house prices soared even as the world suffered its worst slump since the Great Depression. This same phenomenon has taken hold across the globe; home prices are skyrocketing, and many buyers are panicking.
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, which is the fastest growth in the past two decades.
Many are wondering if and when this bubble will burst but according to experts, it does not look things will be changing any time soon. We will see how things play out over the remainder of the year and into next but with borrowing remaining cheap, borders reopening, and foreign investors re-entering the market, we may see an increase before the opposite can occur.
Effects of Covid -19
In an unexpected twist, the pandemic has benefited house prices. 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. As people were forced to transform houses into offices and classrooms, it didn’t take long for a “race for space” to take hold. A lot of people are financially in a better position than they were before the pandemic hit. Between spending less on vacations, not eating out, etc., people are able to put a bit more money towards a home. However, with inventory levels far below the norm in a lot of places, people are “panic-buying properties” similar to how many began panic buying toilet paper simply for the fear we may run out.
Although, even with inflation edging higher, policymakers are expected to keep interest rates low to secure the recovery. They may have to change tack if prices keep rising and hold steady at higher levels, but major central bankers have been at pains to stress they’re comfortable to let their economies run hotter than normal if it will help juice growth and create jobs.
All in all, don’t expect this boom to bust any time soon. As the market continues to grow and people continue to search for a new space to call home, we at Aerial State Media look forward to continuing our work with real estate agents and their clients. Our goal is to provide quality images, video, and aerial media to help prospective buyers see the potential within each and every home. In this post-pandemic world we find ourselves in, home may be more important than ever.