The Economist April 10th 2021 pp65-66 |Finance & economics|Global property|”The race for space” “House prices in the rich world are booming. Unusually, suburbs not cities are feeling the heat”
Read the article for all detail
Summary
Data presented in graphs. Using Q1 as 100 “Real house prices” have increased as of 2020 to 290 in Canada, 225 in Australia, 200 in France & Britain, 150 in the U.S., 140 in Ireland and 130 in Germany. Compared to January 2020 (100) by February 2021 prices have increased to about 110 in Dense and Quite Dense areas and about 108 in Sparse and Packed areas.
Last year American home prices rose 11%, German 9% and Britain 8%. “Prices in less populated, but still commutable places, rather than city-centers,…are rising most.” House prices “outside of Germany’s seven biggest cities rose by 11% last year compared to 6% within them.” Manhattan prices fell by 4% and rents too were impacted falling 15% in Manhattan and 9% in all of NYC. In fact, in 2020 London’s population may have fallen 8% and “The Federal Reserve Bank of Cleveland finds that migration out of cities in America doubled to 56,000 people per month from March 2020 compared with the 2017-19 average.” This is a reversal of prior trends of higher inner city growth and a direct correlation with economic outlook. This change is thought to involve “furlough schemes and fiscal stimulus [that] have limited distressed sales this time” as well as historically low interest rates. The current trend, according to Lucian Cook (Savills) suggests that “home values are being ‘driven by haves rather than have nots.’ Second home accounts for 14% of recent mortgages. With COVID lockdowns, homes took on greater function as “offices, schools, gyms and bakeries.” Sales closed fast at 47 days in the U.S. versus 59 days in 2019. Some predict inflow to cities after the lockdowns but others point out that the suburban allure may persist as 40% of companies may allow at least partial work-from-home lessening the grind of commuting.
Comments