Housing booms during the pandemic
Amid the COVID-19 pandemic, countries like the United States and United Kingdom have been experiencing what can only be described as a housing boom.
In the US, house prices have risen at their fastest pace since 2006 (Forbes, 2021), while the UK has seen a 10.2-percent increase, the fastest annual rate since the mid 2000s (Reuters, 2021). Many markets across Europe and Australia are also showing these same patterns, which leads one to ask: why is there a housing boom in the West and how can one be encouraged in our own region?
More robust property markets
Those who experienced the tail end of the 2009 financial crisis—which metastasized through an overinflated property market, over leveraged lending practices and rampant investor speculation—may think current trends in the West are leading to a similar set of circumstances. But there are key differences that may lead to a different outcome.
Unlike the previous crisis, property markets now are generally more robust since financial institutions have adopted stricter lending standards. Also, there is a shortage of available housing in the US even prior to the pandemic, so that shortage and the growing demand have simply accelerated housing prices rather than artificially inflating them.
In Southeast Asia, Singapore is the only country experiencing a housing boom, but it’s still not comparable to the US or Europe. In the first three months of 2021, property prices rose 3.3 percent quarter on quarter. Aside from capitalizing on low interest rates, another general rationale of investors and buyers is that since the market is currently down, prices will inevitably go up once the economy recovers (Bloomberg, 2021).
Hunt for bigger spaces
Due to the pandemic and the lockdowns, many have been searching for larger spaces. In the UK, there is a limited supply of multiple bedroom houses available in the market. Buyers are looking for spacious family homes where they can also work (BBC, 2021).
You see this trend also happening in the Philippines. According to Collier’s Q1 Residential Report, there is a growing demand for bigger living spaces, even outside of Metro Manila. The Philippines might not be experiencing a huge housing boom right now, but at least we can see that living spaces and their floor plan size are crucial for property developments moving forward.
There have been many times throughout history when physical property has been derided as irrelevant, overpriced or less profitable than other investments. However, canny investors always seem to come out ahead of the curve.
Shelter and security are foundation components of Maslow’s Hierarchy of Needs. Property has a physical tangibility, resonating a fundamental need. Individual markets can fall prey to financial manipulation, but so long as there is strong lending governance and the supply-demand matrix is in balance, property will continue to play a large part in the recovery of economies globally.
Vox.com, Bloomberg.com, Colliers.com,
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