Housing market risks in the wake of the pandemic

From a new paper by Deniz Igan, Emanuel Kohlscheen and Phurichai Rungcharoenkitkul:

“House prices rose strongly in advanced economies during the pandemic, breaking with typical post-recession patterns. These developments support domestic demand in the short term but carry risks to the outlook if they reverse. Rapid economic recovery, fiscal support and high saving rates amid negative real interest rates explain part of the strong housing demand. Pandemic-induced demand for space, structural supply constraints and increased demand from investors provide additional support for house prices. The monetary policy response to inflationary pressures will be a relevant factor when assessing housing market risks. Moderate increases in interest rates could help forestall speculative demand.”

Posted by at 1:50 PM

Labels: Global Housing Watch


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