As inflation rises, global house prices are soaring at an unprecedented rate.
Global real house prices are rising at their fastest pace since records began in 45 years, said Doug Porter, an analyst at (BMO) at the Bank of Montreal of Canada. According to data compiled by the Dallas Fed, house prices have risen more than 6% year-on-year, surpassing the peaks of 2005 and 1989.
The index comprehensively reflects house prices in 24 countries around the world, including all G7 countries, as well as South Korea, Israel, South Africa, New Zealand and Slovenia. The data are weighted by national GDP, so the US has the largest weight. At present, house prices in the United States and Canada lead the world at 23.4% and 20%, respectively.
The median price of existing homes in the US reached an all-time high of $363300 in June, up 23.4 per cent from a year earlier, according to a US existing home sales report released last night. According to statistics, the median price of existing homes has been on a rising track since the beginning of the year.
Lawrence Yun, chief economist at the (NAR) of the National Association of Realtors, commented that median home prices are unlikely to fall as inventories remain tight, but he expects house price growth to slow by the end of the year.
The cost of renting houses in the United States has also risen significantly. Us housing rents grew at an annual rate of 2.6 per cent in the year to June, compared with 1.5 per cent in the year to February, according to CPI data last month. Once the increase in housing cost is reflected in the lease contract, it will be difficult to reverse.
The increase in house prices in Canada is second only to that in the United States, at about 20%. Residential mortgage growth in Canada is accelerating, rising 8.3 per cent in May from a year earlier, the highest level since 2010, according to Porter. The fastest growth in Canadian house prices over the past three decades was 14 per cent in 2007, but the country has grown at an annualised rate of nearly 12 per cent in the past three months.
If house prices continue to rise and sales remain strong, Canada is likely to overtake the US as the fastest soaring country in the world, Porter said.
