Global markets not fully recovered from pandemic
Despite headwinds created by the Delta, Omicron and other COVID-19 variants, U.S. economic recovery is closer to prepandemic trends, but the pace of recovery for other major advanced countries has not been as quick, according to California Association of Realtors Deputy Chief Economist Oscar Wei. At a recent “2022 Global Housing Market” presentation to members of the Silicon Valley Association of Realtors, Wei said housing material shortages continue to limit global activity. Low affordability, inflation and geopolitical tensions, exacerbated by the current Russiaukraine conflict, have led to volatility in mortgage rates.
“The world is already feeling economic impacts of the Russiaukraine conflict,” said Wei.
Oil prices have been erratic at best, jumping in recent weeks to levels unseen since 2014, said Wei. Russia produced 9.7 million barrels per day last year, second only to the U.S. This amounts to more oil produced by Iraq and Canada combined. Russia is also the world’s largest supplier of wheat, and together with Ukraine accounts for nearly a quarter of total global exports.
Wei indicated in third-quarter 2021, home prices in nearly half of global markets were up 10 percent from 2020. The average annual price change across 56 countries/ territories was 9.4 percent; 27 markets registered double-digit price growth, up from 18 in Q2 2021.
New Zealand
(21.9%), Australia (18.9%), U.S. (18.7%), and Canada (17.3%) were among the top 10 with year-over-year price growth rate. Price growth was smaller in Asia, with minor price growth in Hong Kong (3.8%), Mainland China (3.2%), and India (0.1%).
A global poll conducted by Reuters late last year found respondents in most countries believe housing affordability will worsen in the next two to three years as many countries struggle with a supply issue, high prices, and inflation.
According to the National Association of Realtors 2021 Profile of International Transactions in U.S. Residential Real Estate, during April 2020–March 2021, the largest share of international buyer purchases came from Canada (8%), Mexico (7%), and China (6%). The United Kingdom and India tied at 4 percent. Florida is the first destination state for foreign buyers, accounting for 21 percent of all international purchases. California is the second at 16 percent. Other states where international buyers purchased property were Texas (9%), Arizona (5%). New Jersey and New York tied at 4 percent.
Foreign buyers from Canada preferred properties in Florida, Arizona and California. Buyers from Mexico preferred properties in Texas, California and Colorado. Buyers from China continue to prefer California. Those from India also prefer California, and most buyers from the UK prefer Florida.
In California, the number of international buyers bounced back, up 4.9 percent from 2020. Wei believes that percentage will fall to around 3 percent this year, as the share of Chinese buyers will be restricted because of recent lockdowns imposed by the Chinese government due to a high number of Covid infections in Shanghai and other places there.
Until a few weeks ago, growth expectations for 2022 looked pretty strong for advanced economies. Economists predicted home prices would continue to grow in most countries, but at a more moderate pace, said Wei. The new wave of Covid infections which is also hitting Europe and the Russia-ukraine conflict have increased the uncertainty of short-term prospects.
According to Atsuko Yube, chair of the local Realtor association’s global business council, now is a good time for Realtors to learn more about the global housing market. “I encourage Realtors to take the Certified International Property Specialist courses currently offered by SILVAR and learn to be a global real estate expert, so when other countries recover, you will be prepared to meet the demand,” said Yube.
To learn more about the CIPS courses and how to earn the prestigious National Association of Realtors CIPS designation, contact SILVAR at (408) 2000100.