Economists had expected a house-price bloodbath. In March 2022, when the Federal Reserve first started raising interest rates to combat resurgent inflation, the average value of a house in a rich country was 41% higher than five years earlier. Prices had bounced back from the financial crisis of 2007-09, then rocketed during the covid-19 pandemic (see chart). 目前2023房價比2017年還要高41%, 2017年當時房價已經恢復08金融風暴前水準
Global house prices have certainly come off the boil. They are 3% below their recent peak, or 8-10% lower once adjusted for inflation. This is in line with the average correction since the late 19th century. Yet this slump should have been different because it followed a boom when prices rose at their fastest rate of all time. The upshot is that real house prices remain miles above the level of 2019. Many millennials and Gen-Zers, who had dreamt that a crash would allow them to buy their first house, are no doubt disappointed. 許多千禧世代和Z世代, 都希望目前房價回檔一些, 好買進他們人生中第一棟房子 ( 暗示全美購屋需求未來一直都存在)
By
contrast with previous housing slumps, there is no hint that lower house prices
have created financial contagion. Banks do not seem worried about a surge in
bad mortgages. They have fewer risky loans and have not binged on dodgy
subprime securities. In New Zealand mortgage arrears have risen, but remain
below their pre-pandemic norm. In America delinquencies on single-family
mortgages recently hit a post-financial-crisis low. In Canada the share of
mortgages in arrears is close to an all-time low.
Nor
do property woes appear to be throttling the wider economy. Weaker housing
investment is dragging on economic growth, but the effect is small. In previous
housing busts the number of builders declined sharply long before the rest of
the labour market weakened. Yet today there is still red-hot demand for them.
In South Korea construction employment has dropped slightly from its pandemic
highs but now seems to be growing again. In America it is rising by 2.5% a
year, in line with the long-run average. In New Zealand construction vacancies
remain well above historical levels.
Three
factors explain the rich world’s surprising housing resilience: migration,
household finances, and people’s preferences. Take migration first, which is
breaking records across the rich world. In Australia net migration is running
at twice pre-pandemic levels, while in Canada it is double the previous high.
Demand from the new arrivals is supporting the market. Research suggests that
every 100,000 net migrants to Australia raise house prices by 1%. In London,
the first port of call for many new arrivals to Britain, rents for new lets
rose by 16% last year.
Strong
household finances, the second factor, also play a role. Richer folk drove the
housing boom, with post-crisis mortgage regulations shutting out less
creditworthy buyers. In America in 2007 the median mortgagor had a credit score
of around 700 (halfway decent), but in 2021 it was close to 800 (pretty good).
Wealthier households can more easily absorb higher mortgage payments. But many
borrowers will also have locked in past low interest rates. From 2011 to 2021
the share of mortgages across the eu on variable rates fell from close to 40%
to less than 15%. Even as rates have risen, the average ratio of debt-service
payments to income across the rich world remains lower than its pre-pandemic
norm. As a result fewer households have had to downsize, or sell up, than
during previous slumps.
The
pandemic itself has played a role. In 2020-21 many households drastically cut
back on consumption, leading to the accumulation of large “excess savings”
worth many trillions of dollars. This stash of savings has also cushioned
families from higher interest rates. Analysis by Goldman Sachs suggests a
positive correlation across countries between the stock of excess savings and
resilience in house prices. Canadians accumulated vast savings during the
pandemic; home prices there have recently stabilised. Swedes amassed smaller
war chests, and their housing market is a lot weaker.
The
third factor relates to people’s preferences. Research published by the Bank of
England suggests that shifts in people’s wants—such as the desire for a home
office, or a house rather than a flat—explained half of the growth in British
house prices during the pandemic. In many countries, including Australia, the
average household size has shrunk, suggesting that people are less willing to
house-share. And at a time of higher inflation, many people may want to invest
in physical assets, such as property, infrastructure and farmland, that better
hold their value in real terms. All this could mean that housing demand will
remain higher than it was before the pandemic, limiting the potential fall in
prices.
