BENGALURU - Most major housing markets won’t keep up with consumer price inflation in 2021 and are faced with multiple downside risks despite rising strongly this year amid the coronavirus pandemic and rock-bottom interest rates, Reuters polls showed.
But many governments around the world have lifted lockdown restrictions and reopened parts of their economies in the past few months. An unprecedented amount of fiscal and monetary stimulus has boosted housing market activity. “Looking ahead, a weak economy, tight credit conditions and the end of these short-term factors supporting demand will hold back growth in house prices next year. We expect house prices to stagnate in 2021.”With many businesses permanently damaged by the pandemic, high unemployment was expected to be the biggest threat to housing market activity over the coming years.
“But lack of appetite for lending for house purchases or tighter credit standards, due to worries about borrowers’ creditworthiness, may challenge the monetary policy transmission into the real economy.” “Under our constant severity stress scenario, the U.S. enters a double-dip recession and both the labor and housing markets don’t sustain a persistent turnaround until mid-2022.”
“The future of immigration is the big question mark. The lack of supply, particularly insufficient affordable housing, is very unfortunate,” said Sebastien Lavoie, chief economist at Laurentian Bank in Montreal.