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Home prices in many markets worldwide are surging at their fastest pace in about 15 years, fuelling further talks of a post-pandemic housing bubble.
Prices of residential properties across more than 50 countries and territories worldwide went up by 7.3 percent in March 2021 compared to March 2020, the fastest rate since the last quarter of 2006, according to Knight Frank’s Global Price Index.
Rates increased the most in Turkey at 32 percent, followed by New Zealand (22.1 percent), Luxembourg (16.6 percent), Slovakia (15.5 percent) and United States (13.2 percent). A total of 12 housing markets have posted double-digit growth over the last 12 months to March 2021.
Knight Frank’s index also showed that overall, at least 52 countries have seen price increases, with the lowest percentage of growth reported in Cyprus at 0.8 percent. The UAE market, which has reported marginal increases in select locations, did not show up in the list.
“With 12 countries recording double-digit price growth in the year to Q1 2021, it is no surprise that talk of post-pandemic housing bubbles is increasing but authorities are already starting to take action,” Knight Frank said in its report.
Avoiding another bubble
In countries like China, New Zealand and Ireland, authorities have rolled out a series of measures from more stringent lending rules to higher stamp duties for multiple purchases.
“Canada is also looking closely at a national vacancy tax and China is mulling over a national property tax,” Knight Frank noted.
Prices in some communities in Dubai and Abu Dhabi have recently seen an uptick following a surge in sales transactions, but overall, the UAE market remains subdued.
As of March 2021, apartment sales prices in Abu Dhabi fell by 2 percent on average, while villa sales rates dropped by 1 percent compared to 12 months earlier, according to Asteco’s data. In Dubai, apartment sales prices also fell by 2 percent, while villa prices went up by 3 percent during the same period.
A separate analysis by ValuStrat also showed that capital values in Dubai posted a 10.9 percent annual fall as of the first quarter of 2021.
Knight Frank recently said that despite a surge in demand from buyers in Dubai, the overall decline in sales prices looks set to continue at a rate of 2 percent to 3 percent.
"The supply-demand imbalance has been a defining feature of Dubai's residential market ever since the Great Recession of 2008-09.. Looking at the next few years, this looks set to persist," Faisal Durrani, head of Middle East Research at Knight Frank, told Bloomberg earlier.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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