A GOOD TIME TO INVEST - GLOBAL PROPERTY MARKET REVIEW FOR 2022!
Category Economy
At the outset of your career in real estate, you learn that property is 'a people-powered industry', and you're introduced to the 3D's as primary reasons for property sales - Death, Divorce & Debt. With the last two years in my rear-view mirror, I'd like to take the liberty of adding a fourth D to the list - Disease!
The outbreak of COVID gave rise to increased home buying in many parts of the world! Most cited factors contributing to the property boom are:
- lower lending rates due to the global trend of central banks aiming to support economic growth, and,
- the changing work dynamics allowing remote working, that has encouraged buying outside cities, and in totally new locations - including Mauritius for some!
It's interesting to review other factors driving the market during this time. As an example, buyers having bigger deposits because of savings accumulated due to lockdowns and restrictions on travel and going out! YahooFinance estimates that "in the six quarters between Q1 2020 and Q2 2021, households accumulated close to 6% of 2019's GDP in excess savings in the eurozone".
"From this beautiful 'rock' here in paradise, I've done some reading on the global housing market during the pandemic, and what the forecasts are for 2022", says Judi from RE/MAX 24 Mauritius. Below are some trend reviews from around the world.
MAURITIUS
With more options available as the barriers to entry are less stringent, and prices more affordable to non-citizens (whether one wants residency or not), foreign investment is driving a large portion of the property market in Mauritius. The island attracts professionals, self-employed entrepreneurs, investors and retirees, largely from France, South Africa and the UK. That said, curiosity from the rest of Europe is beginning to grow as money in the bank is no longer earning interest and clients are considering investment properties as a worthwhile addition to their portfolios. Prices are increasing steadily as the island develops at a phenomenal rate. Though there was a decline in the number of actual transfers in 2020, from an average of +300 per annum to around 250 during the COVID period, these properties should transfer in the coming months as the island opens up and visitors can once again travel to Mauritius. The outlook remains very positive.
SOUTH AFRICA
The recent interest rate hike, growing limited inventory for buyers, higher prices, and the continued flexibility to work remotely will see the housing market level out in 2022 from the growth experienced in the past year. With more stock on the market, prices should moderate marginally and the balance between sellers and buyers will normalise.
- BusinessTech
USA
Danielle Hale, Realtor.com chief economist: We expect a whirlwind 2022 for the housing market. Home sales are expected to increase another 6.6% and home prices to rise another 2.9% on top of 2021 highs. A gradual uptick in mortgage rates will make affordability a top consideration for home buyers, especially the 45 million Millennials aged 26 to 35 who are at prime first-time home buyer age. Demand from these young households will keep the market competitive and fast-paced despite a small uptick in housing inventory as builders continue to ramp up production.
- quoted in Forbes
AUSTRALIA
Over the past year, Sydney house prices have risen over 24%, Melbourne 15% and Brisbane 20%. But the momentum in growth is showing signs of easing, since peaking in March. Now I know some potential buyers are asking "How long can this last? Will the property market crash in 2022?" They must be listening to those perma bears who keep telling anyone who's prepared to listen that the property markets are going to crash, but they've made the same predictions year after year and have been wrong in the past and will be wrong again this time. What's ahead for property values in 2022? - While property prices are notoriously difficult to forecast, in my mind property values will keep rising in 2022, but not everywhere and not to the same extent as they have over the last year.
- excerpt from propertyupdate.com.au
UK
The price of homes boomed in 2021, with new figures showing more than half of all UK homes will have risen in value by a whopping £15,000 over the course of the year. The housing market has gone from strength to strength since the end of the first lockdown in March 2020, with a surge in sales pushing average prices to all time high. Zoopla has recently said approximately one in 16 homes across the UK will have changed hands by January 1, with 1.5 million house purchases taking place so far this year. The record pace of sales and prices is unlikely to continue at such a sharp rate - but prices are unlikely to come down, according to experts.
- excerpt from article in Express
EUROPE
Housing prices in Europe are rising at the fastest pace since 2006, S&P Global said, as the residential home market recovers from the pandemic faster than other sectors of the economy. The report also said that while inflation may have peaked, it is here to stay.
Prices rose by 6.9% on average in Europe in the second quarter of 2021, compared with the same quarter of last year. In most markets, strong demand pushed transaction volumes above their pre-pandemic levels. Lending for housing purchases is more dynamic than in 2019, and construction activity is close to full capacity. As supply of new housing is not able to keep pace with structural demand, the rise in housing costs is expected to continue over the next four years.
- excerpt from YahooFinance article
As seen in the graph below, housing prices in most European markets has risen steeply since the pandemic - an anomaly being Portugal.
The property market growth has been phenomenal in most areas with unit sales and prices increasing considerably. Even though the forecast is that there is likely to be a slow-down in the number of sales, it seems that the prices are set to continue rising, specifically where there is new development as the prices of materials has increased.
Seems like a great time to invest your money in property - diversify your portfolio and capitalize on the projected growth rather than leaving your cash stagnant while the interest rates aren't to your advantage!
Wishing everybody a property prosperous 2022!
Author: Judi Ribeiro
