The other Covid contagion - around the world, property prices are rising

ANALYSTS are flagging higher odds of cooling measures in Singapore, as private home prices here rise for the fourth straight quarter, flash estimates show. Elsewhere around the world, other markets are also seeing property prices gain amid low interest rates, despite the economic ravages from a global pandemic.


New Zealand

House prices in the island country rose last year at the fastest pace since mid-2017 amid record-low interest rates and a surge in demand for investment property.

The country's success in combating the coronavirus has made it a safe haven for returning Kiwis and investors, who have parked their funds in real estate. In March, house prices were reported to be up 23 per cent in just 12 months, far ahead of wage growth.

Prices have also doubled over the last decade, making New Zealand the least affordable among the 36 wealthy Organisation for Economic Co-operation and Development (OECD) nations.

The government is considering enforcing stricter mortgage lending rules and lowering tax rates on investments outside of housing to curb demand.

However, Kiwibank chief economist Jarrod Kerr noted in reports that the solution lies in increasing housing supply. CoreLogic's head of research Nick Goodall also said in a January statement, as reported by Bloomberg, that the long-term affordability of the property market is reliant on significantly increasing supply, which is a "slow-moving factor".


Hong Kong

Hong Kong private home prices rose 0.9 per cent in February from the previous month, their fastest pace of growth since May, official data showed on Monday.

Property consultancy firm Cushman & Wakefield said earlier in March that it expects home prices to rise 5 per cent quarter-to-quarter in April-June.

The consultancy firm also noted that improved sentiment over new coronavirus vaccines which arrived earlier than expected is also likely to speed up economic recovery.

Low interest rates and insufficient supply have pushed up Hong Kong's property prices. Its housing market was the world's least affordable for the 11th year in 2020, said research firm Demographia.

Former leader Leung Chun-ying said on Thursday that officials will likely focus on providing more housing units and taking measures to limit the pace of gains such as by increasing stamp duty.


Canada

Home prices in Canada jumped 25 per cent in February from a year ago, with the average resale price hitting a record C$678,091 (S$726,041). Prices were up 9.1 per cent from January.

Last Thursday, Canada's national housing agency warned of overheating on a national level and said there was "a high degree of vulnerability" in housing markets in five cities, including Ottawa and Toronto.

The latter saw a great increase in luxury property transactions this year. Sales of homes worth more than C$4 million (S$4.3 million) rose 157 per cent in January and February from a year earlier, compared with the 52 per cent rise across all price ranges in the same period.

Since the Covid-19 pandemic, job losses have been concentrated among people who rent, while higher-paid professionals able to work from home have taken advantage of record-low mortgage rates to scoop up bigger living spaces.

While the eye-watering price gains are prompting calls for action, policymakers have so far been unwilling to intervene for fear of undermining Canada's still-fragile economic recovery from the pandemic.


United States

US home prices surged in January, jumping the most since 2006, as historically low mortgage rates fuelled the pandemic real estate rally.

Rates for 30-year mortgages plunged to a record low 2.65 per cent in January, boosting borrowing power as Americans sought larger properties in the suburbs.

Meanwhile, sales of previously owned homes declined in February to a six-month low.

With fewer homes to buy and an increased demand, bidding wars have fuelled a frenzied market that has seen prices surge in recent months.

Still, Bloomberg said on Thursday that the tailwind provided by low borrowing costs may ease, with concern about broader inflation pressures helping to fuel a selloff in Treasuries.

Since finding a nadir in January, mortgage rates have risen to 3.17 per cent, the highest in more than nine months. That month also saw the smallest month-over-month gain of 1 per cent since June.


Australia

The country saw home prices rising at the fastest pace in three decades in March as the prospect of years of record-low interest rates increased demand amid a wide scale shortage of available property, particularly detached houses.

Sydney led the charge with a blistering gain of 3.7 per cent in March, and 6.7 per cent for the entire first quarter. Prices in Melbourne and Brisbane rose 2.4 per cent, with Perth up 1.8 per cent.

Buyers have been encouraged by the outlook for borrowing costs, with the Reserve Bank of Australia repeatedly saying rates were likely to remain at an historic low of 0.25 per cent until at least 2024.

For every new listing added to the market, 1.1 homes are sold," said CoreLogic's head of research, Tim Lawless, in a Reuters report. "Such a rapid rate of absorption is keeping overall inventory levels low and adding to a sense of FOMO (fear of missing out) amongst buyers."

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