OECD Member Countries See Largest Housing Price Increase in 30 Years

1Q House Prices Up 9.4% YoY... 37 of 40 Major OECD Countries See Price Increase in 1Q

[Asia Economy Reporter Park Byung-hee] In the first quarter, the housing price growth rates of major countries recorded the highest levels in 30 years, raising concerns that this could become a potential threat to global financial stability.

On the 1st (local time), a foreign news agency reported that housing prices in OECD member countries rose by 9.4% year-on-year in the first quarter of this year, marking the fastest increase in 30 years. In particular, housing prices in the United Kingdom, Korea, New Zealand, Canada, and Turkey showed significant increases.

According to data analyzed by the OECD, among the world's 40 major countries, only three experienced a decline in housing prices in the first quarter of this year.

Low interest rates, increased savings during the COVID-19 pandemic, and demand for more comfortable environments while working from home have combined to drive up housing prices. The rise in prices of housing construction materials such as steel, lumber, and copper has also been cited as a cause of the housing price increase. The rise in housing prices is expected to continue into the second quarter.

As housing prices have risen sharply, concerns about a bubble burst are growing. Adam Slater, an economist at Oxford Economics, analyzed that "considering the long-term trend, there is about a 10% bubble in advanced countries' housing prices." However, he explained that the risk of a housing market bubble burst is lower than during the 2008 global financial crisis, noting that the debt growth rate is lower than in 2006-2007, just before the 2008 crisis.

It is also analyzed that the experience of the 2008 financial crisis has led central banks worldwide to more closely control the risk of overheating in the housing market, which reduces the risk of a collapse. Deniz Egan, Deputy Director of the Macro-Financial Division at the International Monetary Fund (IMF), also stated that "household debt in advanced countries is lower than before the 2008 global financial crisis."

The housing price growth rate in OECD member countries has exceeded income growth rates, making homeownership more difficult. Martinez Garcia, Senior Economist at the Federal Reserve Bank of Dallas, analyzed that "during the pandemic, household savings increased significantly, especially among the wealthy, due to restricted consumption," and "a substantial portion of the additional income flowed into the housing market."

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