Property prices in many markets globally are increasing at their fastest pace in about 15 years, fueling further discussions of a post-pandemic housing bubble.
Costs of residential properties over more than 50 countries and territories globally increased by 7.3% in March 2021 in comparison to March 2020, the fastest rate since the last quarter of 2006, as per Knight Frank’s Global Price Index.
Rates raised the most in Turkey at 32%, then came New Zealand (22.1%), Luxembourg (16.6%), Slovakia (15.5%), and the United States (13.2%). A whole of 12 housing markets has posted double-digit growth over the previous months to March 2021.
Knight Frank’s index also provided that overall, at least 52 counties have seen cost rises, with the lowest percentage of growth registered in Cyprus at 0.8%. The UAE market, which has registered marginal rises in select locations, did not show up in the list.
“With 12 countries recording double-digit price growth in the year to Q1 2021, it is no surprise that talk of post-pandemic housing bubbles is increasing but authorities are already starting to take action,” Knight Frank said in its report.
Avoiding another bubble
In countries like China, New Zealand, and Ireland, authorities have carried out a series of measures from more stringent lending rules to higher stamp duties for different buys.
“Canada is also looking closely at a national vacancy tax and China is mulling over a national property tax,” Knight Frank noted.
Costs in certain communities in Dubai and Abu Dhabi have recently seen an uptick following a flood in the deal, yet generally speaking, the UAE market remains subdued.
As of March 2021, apartment deal costs in Abu Dhabi fell by 2% on average, while villa deal rates dropped by 1% compared with a year earlier, as per Asteco’s information. In Dubai, apartment deal costs also fell by 2%, while villa costs went up by 3% during a similar period.
A different analysis by ValuStrat also showed that capital qualities in Dubai posted a 10.9 percent yearly fall as of the first quarter of 2021.
Knight Frank recently said that in spite of a surge in demand from purchasers in Dubai, the general decrease in deal costs looks set to proceed at a pace of 2% to 3 percent.
“The supply-demand imbalance has been a defining feature of Dubai’s residential market ever since the Great Recession of 2008-09. Looking at the next few years, this looks set to persist,” Faisal Durrani, head of Middle East Research at Knight Frank, told Bloomberg earlier.