As Australia emerges from Covid-shock and property prices are tipped to grow 20 per cent over the next two years, BIS Oxford Economics says the nation is not alone in its housing boom.
BIS economist Maree Kilroy said housing demand had picked up in recent months with a boost to prices and construction of new dwellings, particularly in the regions. This phenomenon has been mirrored in other countries across the world.
“Australia’s recent experience has not been unique,” Kilroy said.
“Over the past six months, new house approvals and prices have also lifted in the United States, Canada, and New Zealand, despite experiencing considerable variation in the severity of the pandemic and related restrictions.”
Kilroy said the property market resurgence across the disparate countries was attributed to low interest rates, elevated household savings and shifts in preferences. Central banks in Australia, Canada, United States and New Zealand all cut their cash rates to near zero.
Direct government support for the housing sector varied widely between countries.
Canada offered a GST rebate, New Zealand relaxed its loan-to-value ratio restrictions, and Australia created the HomeBuilder program, which Kilroy said was the most generous stimulus package.
^Source: BIS Oxford Economics
“The fundamentals underpinning strong demand across the board are expected to remain post HomeBuilder. The continuation of accommodative interest rates, the increased importance placed on housing and shifting preferences should sustain growth in housing construction in each country near-term,” Kilroy said.
Kilroy said regional centres would continue to do well across the board. House approvals in regional Australia have grown 35 per cent year on year in the second half of 2020, followed closely by Canada’s regions at 30 per cent.
“Growth in regional demand has outpaced metropolitan areas in all four countries, disproportionately benefitting houses over apartments,” Kilroy said.
“The desire to move to less populated areas, or rather the lack of regional flows towards metropolitan areas has emerged across the countries. Regional areas have on average faced less economic impact and benefit from better housing affordability.”