While the U.S. housing market is on fire, residential real estate prices around the world have risen in tandem, pushing up suspicions of a housing bubble and prompting some governments to intervene to avoid an overheated housing market.
Prior to the outbreak of the new crown (CCP virus) Epidemic, policymaking officials in Europe, Asia and Canada were already concerned about high housing prices in some areas, especially since low interest rates over the past few years have kept demand strong.
However, the introduction of trillions of dollars of stimulus measures around the world to combat the economic impact of the new crown epidemic, coupled with the telecommuting trend that has changed people’s Home buying patterns, has further fired up the housing market.
This situation puts policymakers in a dilemma: they want to keep interest rates low to support the economic recovery, but they are concerned about overburdening people’s mortgages and the possibility of stagnant or declining home prices afterwards. Moreover, strengthening mortgage restrictions and other tools to cool the housing market may not be effective, or the authorities are trying to maintain economic growth, and delayed implementation.
Denmark’s central bank has recently warned that low interest rates and increased savings during the epidemic could increase the debt people carry when they buy a home and push up home prices, but the rise in prices cannot continue in the long run.
In mainland China, the authorities have had little effect on housing, with prices in Shenzhen rising 16% over the past year; in New Zealand, although lending standards have been tightened recently, the median house price in February still soared 23% from a year earlier to a record high.
The Organization for Economic Cooperation and Development (OECD) data show that 37 wealthy member countries in the third quarter of last year, house prices rose to a record high, and last year rose nearly 5%, the largest increase in nearly 20 years.
U.S. home prices have also risen sharply, but economists are generally not too worried because buyers have better credit ratings and are paying more cash up front than during the previous housing boom.
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