- Global real property prices increased by 4% year on year in Q4 2020, against the backdrop of the Covid-19 pandemic and the associated fiscal and monetary stimulus.1
- Real prices grew by close to 7% on average in advanced economies (AEs), and by 2% in emerging market economies (EMEs).
- Among the major jurisdictions, real house prices rose the most in Turkey, Canada, Russia and the United States, while they kept falling year on year in India.
- In real terms, global house prices are now about one fifth higher than their average immediately after the Great Financial Crisis (GFC) of 2007–09.
Summary of latest developments
Global real house prices rose by 4% year on year in aggregate in the last quarter of 2020, the fastest growth rate since the GFC. This reflected primarily a significant and widespread acceleration in AEs , where prices rose by 6.6% on average, compared with a more modest 2.0% in EMEs (Graph 1) – with notable differences across regions, especially central and eastern Europe (+9%), Latin America (+3%), emerging Asia (0%) and the Middle East and Africa (0%).
In real terms, global house prices now exceed their immediate post-GFC average by 21% (and by 27% and 17% for AEs and EMEs, respectively; Table 1). Among the G20 economies, real prices have risen markedly over the past decade in India, Canada, Germany, United States and Mexico. At the other end of the scale, they remain well below their post-GFC levels in Italy and Russia (Graph 2).
Advanced economies
In aggregate for the group of AEs, real residential property prices soared by 6.6% year on year in Q4 2020, compared with less than 2% one year before.2 Real prices increased markedly in New Zealand (+13%), Canada (+11%), the United States (+8%), the euro area (+6%) and the United Kingdom (+6%). They grew more moderately in Australia and Japan (+3%) (Graph 3).
In the euro area, real house price inflation reached its highest rate since 1999, driven by strong growth in several large member states: by 9% year on year in Portugal, 8% in Germany and the Netherlands, and 6% in France. Prices increased less markedly in Italy and Spain (+2% in both cases) (Graph 4).
Emerging market economies
Real residential property prices grew by 2% year on year in EMEs in the last quarter of 2020. They increased slightly in emerging Asia (+0.4%), reflecting varied developments among the biggest economies: prices were up by 7% in Korea, 3% in Thailand and 2% in China, but remained stable in Indonesia and continued to decline in India (–5%)3 (Graph 5).
Real prices were up in Latin America in aggregate (+2.7% year on year), with strong growth recorded in Brazil (+4%) and a more subdued rise in Mexico (+2%). Turning to central and eastern Europe, they rose by an average of 9.1% year on year, led in particular by a surge in Turkey (+15%) and Russia (+9%), while house price inflation remained strong in Poland (+6%) (Graph 6).
1 Real residential property prices refer to nominal residential property price indicators deflated by the consumer price index. Global aggregates are weighted aggregates of selected AEs (Australia, Canada, Denmark, the euro area, Iceland, Japan, New Zealand, Norway, Sweden, Switzerland, the United Kingdom and the United States) and EMEs (Brazil, Bulgaria, Chile, China, Colombia, Croatia, the Czech Republic, Hong Kong SAR, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, North Macedonia, Peru, the Philippines, Poland, Romania, Russia, Singapore, South Africa, Thailand, Turkey and the United Arab Emirates), based on PPP exchange rates.
2 Property market developments during the pandemic should be interpreted with caution. Anecdotal evidence suggests that conditions have changed markedly, possibly reflecting the impact of lockdowns and social distancing measures on household spending decisions. Yet, data on the number of transactions are scarce and difficult to compare across countries. For instance, Eurostat published house sales transaction data for a mere 12 countries in the last quarter of 2020. Among them, the number of transactions has risen in six, fallen in four and remained flat in two economies, as compared with one year earlier (this nevertheless represented a significant change compared to the second quarter of 2020, when the number of transactions fell significantly in most of these countries as the pandemic escalated). The number of US new single-family houses sold has increased significantly over the same period.
3 Primarily reflecting the impact of higher CPI inflation as nominal house prices were stable in India over this period.