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Corona pushes house prices higher everywhere

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House prices in almost all rich countries recorded huge increases at the beginning of this year. Low interest rates, a lot of savings and the search for space in times of corona are the driving engines behind the tree.

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House prices rose further in almost all 40 OECD countries in the first quarter of this year. And that increase looks set to continue for the rest of the year. On the basis of that analysis concludes Financial Times that the largest housing boom in two decades is underway.

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Now that the economies of the OECD countries are recovering strongly after the corona virus, house prices are quickly following. In the first quarter, that increase was 9.4 percent, the highest figure measured in 30 years.

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This tree is one of the largest since 1900.

Adam Slater

Oxford Economics

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Driving factors are still the low interest rates that are persisting due to the stimulus policy of the central banks. Due to the corona restrictions, many families have also built up savings, which are now starting to roll. And according to analysts, the demand for larger homes is also a factor, spurred on by homeworking that has become widespread.

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An additional factor is the sharply rising prices for building materials. Due to supply problems and the enormous boom, some products have become scarce, resulting in unprecedented inflation.

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The Financial Times does not immediately signal panic about a huge bubble, but vigilance is advised.

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Adam Slater of Oxford Economics points out in the paper that house prices in wealthier economies are about 10 percent overvalued relative to long-term trends. This tree is one of the largest since 1900, he said.

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But central banks are more aware than ever of the risks of overvaluation in the market.

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The National Bank has also pointed this out to us on several occasions, although the increases here seem slightly less pronounced than the average for the OECD countries. Residential houses in Belgium became on average 4.5 percent more expensive than the annual average of 2020, the apartments 4 percent.

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