Bloomberg Economics says the run-up in global real estate prices over the last year…has produced a warning signal unlike any other, not seen since right before the 2008 financial crisis.
New Zealand, Canada, Sweden, Norway, the U.K., Denmark, and the U.S. are considered the “world’s frothiest housing markets” based on a handful of factors via a Bloomberg Economics report.
- real price growth,
- nominal price growth,
- and annual credit growth.
The analysis revealed that price ratios are higher than they were ahead of the 2008 financial crisis.
The big spurts from the digital printing presses have resulted in housing unaffordable in OECD countries to surpass 2008 levels. The gauge of housing affordability is the average of house price-to-income and house price-to-rent indexes.
Bloomberg economist Niraj Shah wrote in the report: “A cocktail of ingredients (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) is sending house prices to unprecedented levels worldwide [BUT] when borrowing costs do start to rise, real estate markets — and broader measures put in place to safeguard financial stability — will face”…downward pressure.
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