Global house price outlook for 2022
Category International
After a period of low interest rates and fiscal easing, many central banks have started increasing their rates over the last few months. This includes South Africa which has seen two rate hikes of 25 basis points each (November and January) with more expected.
According to Euronews.com, pandemic-induced trends in housing buying resulting from lockdowns, more people working from home and staycations have driven higher demand for houses and consequently, higher house price growth globally.
The residential real estate sector was the most active over the last year in particular, outclassing the commercial offices sector.
The IMF also notes that house prices have kept rising throughout the pandemic with the European and USA markets achieving some of the highest growth in years.
Global house price growth seems to have defied expectations, but will it sustain into 2022? Seeff takes a look at how the rising interest rates and inflation may affect the global house price outlook.
2021 was another record year for global house price growth
According to Knight Frank’s Global House Price Index some 54 out of 56 countries (tracked by the HPI) have seen higher than average year-on-year house price growth over the last two years.
The highest growth per country based on nominal growth (before adjustment for inflation) ranks as:
- Turkey - 35.5%
- South Korea - 26.4%
- New Zealand - 21.9%
- Sweden - 20.3%
- Australia - 18.9%
- United States - 18.7%
- Jersey, Netherlands, Slovakia - 18.4% respectively
- Canada - 17.3%
- Estonia - 16.1%
- Iceland - 14.7%
Despite an exodus to the countryside reported in many countries as people look to escape crowded cities during the pandemic, the index shows that cities have performed better in terms of house price growth globally. These include New York which is regarded as the most resilient, as well as London, Tokyo and Paris have all showed excellent resilience in terms of house price growth, despite the pandemic.
Global house price growth outlook for 2022
The IMF expects the global economy to grow by around 4.9% in 2022, down from 6% in 2021. Global inflation was around 4.35% in 2021 and is expected to even out at around 3.81% for 2022.
Against rising interest rates and lower growth, there is now an expectation of cooling demand. Knight Frank anticipates that growth will decline to around 7% for 2022.
South African house prices
According to Samuel Seeff, chairman of the Seeff Property Group, house price growth in SA has been disappointing when compared to global growth, especially given that the interest rate declined to an almost fifty-year low.
Lightstone expects house prices to growth by between 3.4% to 5.1% in 2022. FNB meanwhile expects house price growth of around 3.5%, down from 4.2% in 2021.
Author: Gina Meintjes
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