UK House Prices Hit Record High... Overheating Warnings in Housing Markets Worldwide

[Image source= AP Yonhap News]

[Asia Economy Reporter Park Byung-hee] Warning signs of overheating in the housing market are emerging worldwide. Since the COVID-19 pandemic, governments around the world have injected massive fiscal stimulus and central banks have lowered benchmark interest rates, significantly increasing liquidity. Due to the surge in liquidity, stock markets around the world have reached record highs even during the COVID-19 pandemic, and the housing market is no exception.

British media including Sky News reported on the 9th (local time), citing real estate company Halifax statistics, that the average UK house price in March reached a record high of ?254,606 (approximately 391.44 million KRW). The March house price rose 6.5% compared to the same month last year. This means the average house price increased by about ?15,000 in one year.

In Toronto, Canada, the March house price surged 21.6% compared to the same month last year. The average sale price recorded CAD 1.1 million (approximately 980.28 million KRW).

New Zealand’s house prices rose sharply by 22.8% year-on-year as of February, marking the highest increase ever. The nationwide average house sale price was NZD 780,000 (approximately 616.04 million KRW), and in Auckland, New Zealand’s largest city, house prices reached NZD 1.1 million.

Sweden’s March house prices also increased by 17% compared to the same month last year. The number of house sales in Sweden in the first quarter of this year recorded the highest ever. In Shenzhen, Guangdong Province, China, house prices rose 16% over the past year.

In the United States, some point out that the current housing market bubble is even larger than during the 2008 financial crisis, which was triggered by an overheated housing market. According to the National Association of Realtors (NAR), the median price of existing homes sold in January rose 14.1% year-on-year to $303,900 (approximately 340 million KRW), marking a record high for January sales prices.

Some analysts argue that the current situation differs from the 2008 financial crisis. The overheating of the real estate market before the financial crisis was driven by speculation, but now it is driven by actual demand. Due to COVID-19, people are working from home and spending more time at home, increasing the desire for better housing, which has led to increased housing demand.

However, concerns are growing about the rising household debt ratio driven by speculative demand. Stefan Ingves, Governor of the Sveriges Riksbank (Sweden’s central bank), said about the rising household debt ratio, "It feels like being at the top of a volcano."

Stephen Poloz, Governor of the Bank of Canada, expressed concerns about rising house prices but stated that he would not take measures to suppress housing transactions. Governor Poloz said that stimulus measures are still necessary to prevent an economic recession caused by COVID-19.

This content was produced with the assistance of AI translation services.