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House prices have set new records in the U.S. and parts of Europe as huge tax and monetary incentives continue to eradicate the impact of the coronavirus pandemic on residential markets.
The average home price in the U.S. rose a record 23.6% year-on-year to a new high of $ 350,300 last month as growth was recorded in all regions of the country, the National Real Estate Association said Tuesday.
The European housing market has also risen despite the Covid-19 crisis. In the Netherlands, existing house prices rose by 12.9% in May a year earlier, the fastest growth rate since 2001, according to the Dutch Statistics Office.
The number of home sales fell in the U.S. and the Netherlands, although prices continued to rise, suggesting that demand is outstripping supply. The Netherlands Property Registry said it registered 16,126 home transactions in May, 12.1% less than a year earlier.
Home sales in the U.S. fell 0.9 percent between April and May, with a seasonally adjusted annual rate of $ 5.8 million. The U.S. housing inventory of 1.2 million units was 20.6% lower than in May 2020, according to the NAR, although it has risen 7% since April.
Some economists have said that the decline in sales volume could be a sign that the US housing market has peaked, following last year’s peak in activity in 2006.
“Falling sales and rising inventories mean that the upward pressure on rising prices should soon begin to fade,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Others see further growth, driven by central bank policies. “Loose money conditions can raise asset prices even further, and can eventually lead to a drastic correction,” said Adam Slater, an economist at Oxford Economics. “In the case of central banks, neither this result nor the constant higher inflation are not attractive solutions.”
Rising house prices have attracted the attention of U.S. Federal Reserve officials, mostly due to $ 40 billion a month shopping the values of the mortgage protection agency, which form part of the $ 120 billion bond purchase program.
Dallas Fed Chairman Robert Kaplan recently warned that prices are “historically high” and stressed that financial investors buy large amounts of home ownership. Blackstone, a private equity group, on Tuesday ados Home Partners of America, a single-family rental buyer and operator with a portfolio of more than 17,000 homes, is seeking a $ 6 billion deal.
“More and more single-family buyers are emerging from the market,” Kaplan said at a ceremony hosted by the Official Forum of Monetary and Financial Institutions, the working group, on Monday. “At this stage, we are questioning whether the housing market needs that $ 40 billion a month in support.”
St. Louis Faith President James Bullard said at the same event it might be time to consider whether to “withdraw” the MBS agency’s purchases.
The European Central Bank said a report This week, house prices in the eurozone rose by 5.8% in the fourth quarter of last year, the highest growth rate since mid-2007.
In Germany, France and the Netherlands, the eurozone last year accounted for almost three-quarters of the rise in house prices.
Rising prices and low-cost housing have sparked public outrage among large commercial owners in several European countries. Ireland imposed Anyone who buys 10 or more homes within 10 months is prevented from buying a 10-stamp stamp duty on financial investors.
In Germany, planned Merger of 18 billion euros Vonovia, between the country’s largest landlord and rival Deutsche Wohn, has been hit by rental restrictions as well as calls for the nationalization of companies.
The issue of house prices has also become a lightning rod for criticism of the ECB’s ultra-loose monetary policy. President Christine Lagarde has been questioned about this in the European Parliament this week.
“Young people and middle-class families are forced to take part in the rat race, paying too much for the overheated housing market,” said Michiel Hoogeveen, a Eurosceptic MEP. “This is one of the consequences of the generosity of your money-making and low-interest policies to keep eurozone countries weaker.”
In the face of this, Lagard said there was “no big indication [a] the credit-fueled housing bubble in the euro area as a whole “, but added that there are” residential real estate vulnerabilities “in some countries and in some cities in particular.
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