## Housing Prices Continue to Soar in Many Countries Around the World

_IMF Blog, October 18, 2021_

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**Canonical URL:** [Housing Prices Continue to Soar in Many Countries Around the World](https://www.imf.org/en/blogs/articles/2021/10/18/housing-prices-continue-to-soar-in-many-countries-around-the-world)

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## Bibliographic details
- Authors: The Editors
- Published: October 18, 2021

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### Overview
- While most economic indicators deteriorated last year, house prices largely shrugged off the effects of the pandemic.
- Of the over 60 countries that enter into the IMF’s Global House Price Index, three-quarters saw increases in house prices during 2020.
- The trend of rising house prices has largely continued in countries with more recent data.
- Publication date: October 18, 2021.

### Main drivers of the house price boom
- Low interest rates contributed to the boom in house prices.
- Policy support provided by governments supported demand for housing.
- Workers’ greater need to be able to work from home increased demand for housing (in many countries, including the United States, online searches for homes reached record levels).
- Supply-side factors: supply chain disruptions raised the costs of several inputs into the construction process, supporting higher house prices.

### Policy concerns and distributional effects
- Increases in house prices relative to incomes make housing unaffordable to many segments of the population, as highlighted in the IMF’s recent study of housing affordability in Europe.
- Post-pandemic working arrangements could exacerbate inequality concerns:
  - High-earners in tele-workable jobs may bid for larger homes.
  - This bidding could make homes less affordable for less affluent residents.
- The surge in house prices has impacted headline inflation in some countries and could contribute to more persistent inflationary pressures.
- Policymakers are keeping a close watch on developments in the housing sector.

### Risks and a plausible normalization scenario
- Over a decade ago, a turnaround in house prices marked the onset of the Global Financial Crisis; however, twin booms in household credit and house prices that preceded that crisis—and many previous housing crashes—appear less prevalent today.
- A plausible scenario for normalization in house prices includes:
  - A rise in interest rates,
  - A withdrawal of policy support as economies start to recover,
  - A restoration of the timely supply of building materials.
- These factors could lead to some normalization in house prices.

### Attribution and authorship
- This blog is based on work by Hites Ahir, Nina Biljanovska, Chenxu Fu, Deniz Igan and Prakash Loungani of the IMF Global Housing Watch knowledge group.
- IMFBlog is a forum for the views of the International Monetary Fund (IMF) staff and officials.
- The IMF is an organization of 191 countries, based in Washington D.C.

*Source: Housing Prices Continue to Soar in Many Countries Around the World — IMFBlog (October 18, 2021).*

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## References

- [Global House Price Index](https://www.imf.org/external/research/housing/images/globalhousepriceindex_lg.jpg)
- [https://www.imf.org/wp-content/uploads/2021/10/House-price-chart-cotw-scaled.jpg](https://www.imf.org/wp-content/uploads/2021/10/House-price-chart-cotw-scaled.jpg)
- [online searches](https://www.imf.org/en/Publications/WP/Issues/2020/09/25/US-Housing-Market-during-COVID-19-Aggregate-and-Distributional-Evidence-49775)
- [housing affordability](https://blogs.imf.org/2021/05/26/making-affordable-rental-housing-part-of-europes-recovery/)
- [headline inflation](https://www.imf.org/en/Publications/WEO/Issues/2021/10/12/world-economic-outlook-october-2021)
- [inflationary pressures](https://www.imf.org/en/Publications/GFSR/Issues/2021/10/12/global-financial-stability-report-october-2021)
- [household credit](https://www.imf.org/external/research/housing/images/creditgrowth_lg.jpg)
- [IMF Global Housing Watch](https://www.imf.org/external/research/housing/index.htm)

_Source: https://www.imf.org/en/blogs/articles/2021/10/18/housing-prices-continue-to-soar-in-many-countries-around-the-world_