Whether or not we are in a housing bubble is debatable. Economists still have mixed opinions about the real estate market. However, house prices have continued to rise everywhere in the world. The year-on-year growth rate of house prices has reached double digits after the pandemic.
As of Q1 2021, the US reported a growth rate of 10.3% year-on-year in house prices. Canada, by 8.4%. However, North America wasn't the only place reporting such high growth. New Zealand reported 22.4%. Europe wasn't untouched either. Sweden reported 11.3%, followed closely by Germany at 9.6%.
These high figures are confusing as the pandemic caused the economy of almost every country to contract. Yet despite such contraction, the housing prices continue to rise in nearly every country. Fortunately, the housing market has seen some cool off in recent months. Most countries have already seen a decline in the growth of housing prices.
2021 has been anxious for both home buyers and builders. Prices of timber soared earlier this year, making houses even costlier for home buyers. An existing single-family home in the US has already crossed 274,600 USD. In Australia, the average residential property costs 530,000 USD, while 567,000 USD is the average house price in Canada.
Although demand has weaned off since, economists still think the housing market will continue to keep growing. The housing market has faced some uncertainty in the past few weeks. The Evergrande situation is problematic for the real estate market for China and the rest of the world. Although the company that owes almost $300 Billion narrowly avoided defaulting on its debt, the ripple effects of uncertainty have already caused issues on the global stock and cryptocurrency markets.
As of data from July 2021, most homes are still being sold above the asking price in the US. The median asking price for newly listed homes are about 353,500 USD in the US, yet buyers are paying even more due to the rising costs. The percentage of homes on the market that has reported price reductions is still lower at this point in the year than any comparable period other than 2020.
Despite the debatability, housing prices have certainly grown unusually during the pandemic. Only time can tell about the housing market's future as it rapidly grows despite the challenges it faces.