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Major housing markets to shine this year and next: Reuters poll

EconomyFeb 02, 2021 08:45PM ET
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© Reuters. Homes are seen in Porter Ranch near the site of the Aliso Canyon storage field where gas has been leaking in Porter Ranch

By Shrutee Sarkar

BENGALURU (Reuters) - The outlook for major global housing markets is brighter than previously thought due to expectations for a broad based economic recovery and easy monetary policy, with only a low risk that a COVID-19 resurgence will derail activity, Reuters polls showed.

Over 100 million people have been infected by the coronavirus, leading to a healthcare crisis and deep economic recessions, but fiscal and monetary stimulus, and the rollout of vaccines, mean the global economy is set to recover this year.[ECILT/WRAP]

While already high unemployment caused by the pandemic is expected to rise further, the Jan. 15-Feb. 1 poll of over 130 property market analysts showed average home prices would rise this year and next in most countries polled.

That compares to largely pessimistic predictions made in September.

An economic rebound, loose monetary policy, government stimulus, pent-up demand and tight inventories were expected to boost housing market activity to varying degrees in Australia, Britain, Canada, Dubai, India and the United States.

"A solid economic recovery bolstered by more fiscal stimulus, still-low mortgage rates, and unmet demand should continue to prop up home sales and construction in 2021," said Gregory Daco, chief U.S. economist at Oxford Economics.

"We expect some gradual moderation in price growth over the course of 2021 as home sales cool, but sparse inventory will keep a solid floor under home prices."

Reuters Poll: Major housing markets outlook https://fingfx.thomsonreuters.com/gfx/polling/bdwvkybkqvm/Reuters%20Poll%20-%20Global%20housing%20markets%20outlook%20-%20Feb%202021.PNG

Three-quarters, or 77 of 102 analysts, said in response to an additional question that the risk of a COVID-19 resurgence derailing housing markets this year was low.

Although the U.S. economy on average contracted last year at its sharpest pace since the Second World War due to the pandemic, it had little bearing on housing market activity, an immunity the sector was expected to carry this year.

Despite the recent surge in coronavirus infections and renewed restrictions imposed in the United States, house prices there were forecast to rise over the next two years and activity was expected to continue on a strong course. [US/HOMES]

"The recent COVID-19 surge has not had any noticeable impact, with transactions near record high levels despite record high case growth," said Brett Ryan, senior U.S. economist at Deutsche Bank (DE:DBKGn).

"Pent-up activity from COVID-19-shutdowns earlier in the year will soon start to wane and transactions will likely normalize. More housing supply will come online as vaccination picks up at the same time that base effects will start to roll off."

Reuters Poll: Global house prices outlook - Feb 2021 https://fingfx.thomsonreuters.com/gfx/polling/xklpylyqbvg/Reuters%20Poll%20-%20Global%20house%20prices%20outlook%20-%20Feb%202021.PNG

When asked about the primary driver of housing market activity this year, over 55% of respondents, or 57 of 101, chose an economic recovery and easy monetary policy.

Of the remainder, 20 analysts named a desire for more living space and 18 said a successful vaccine rollout, while six chose fiscal stimulus.

Australian and Canadian house prices were expected to rise significantly this year and next, helped by low mortgage rates and massive fiscal spending. [AU/HOMES][CA/HOMES]

When asked what was more likely for housing market activity, 58 of 100 respondents said an acceleration. The others expected a slowdown.

Those views were swayed by a somewhat modest outlook for the British, Dubai and Indian housing markets compared to the rest.

Indian house prices were expected to barely rise this year despite an economic recovery and supportive policies, and Dubai house prices were predicted to fall at a slower pace this year and next compared to the previous poll. [IN/HOMES][AE/HOMES]

British house prices were forecast to flatline this year.[GB/HOMES]

"While we expect a strong start to the year, we expect momentum to wane following the end of the stamp duty (property sales tax) holiday in April. Towards the end of the year the housing market should settle," said Aneisha Beveridge at estate agents Hamptons International.

(Other stories from the Reuters housing market polls:)

Major housing markets to shine this year and next: Reuters poll
 

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Comments (4)
TL Chan
TL Chan Feb 02, 2021 11:45PM ET
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Offices turning into apartments, we will have supply bigger than demands in offices and home for next 10 years, bye bye estate as investing assets!
TL Chan
TL Chan Feb 02, 2021 11:35PM ET
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How can housing have any boom, when we don't need offices, and retail shops, with the internet remote work and cyber living !
The Chad Bull
The Chad Bull Feb 02, 2021 9:01PM ET
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Millions living rent free and not paying mortgages while we are seeing hyperinflation in prices. What could possibly go wrong?!
Sattar Langary
Sattar Langary Feb 02, 2021 9:01PM ET
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states seem to be doing nothing about it. System has become so unjust. I as a landlord have plan to sell my properties but because of abusive tenants I can't do anything. they have not paid rent for 10-11 months, and holding over, because the courts and poor governance allows them to do so. so unfair, so shamefully unjust...
The Chad Bull
The Chad Bull Feb 02, 2021 9:01PM ET
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Sattar Langary being a landlord isn’t benefitting society. Really unfullfilling “career” bud.
Sattar Langary
Sattar Langary Feb 02, 2021 7:50PM ET
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disagree. housing market will crash. millions of tenants have not paid rent. landlords will be forced to forclose and declare bankruptcy. courts in the USA don't hear tenant and landlord cases. abuse goes on all because of inefficiency and mismanagement.
Josh Moore
Josh Moore Feb 02, 2021 7:50PM ET
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Literally no more then normal. Like a 5% increase. Stop the dear mongering. This real estate market has ways to go in america. We were way behind the rest if the world in cost in most of our country. Many existing homes are still less then 75% the cost to build new.
 
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