Analysts explain why the real estate prices rose in 2020
According to a report provided by the consulting firm Knight Frank, the real estate price showed the most significant annual growth worldwide last year. Such cost escalation has not been observed since 2018. An increase in prices was recorded in 9 out of 10 states and territories despite the pandemic. The price of property rose by 5.6% on average over the past year, while in 2019 the average was 5.3%.
Kate Everett-Allen, managing director of international research at Knight Frank, states that the cost escalation is a result of low-interest rates on loans that support demand. Yet the number of offers in many countries is limited. It has to do with the fact that the owners are in no hurry to part with their housing until the situation with the next house becomes clear. With the introduction of travel restrictions, the demand is mainly coming from the locals. Many have changed their way of life to adjust to the pandemic and are now looking for a home office, preferably with large open spaces.
Statistics shows the following situation in a number of countries:
- In Turkey, house prices rocketed by 30% last year — according to this indicator, the country ranks first in the world.
- New Zealand is second to Turkey, with the prices which rose by 19%. Next come Slovakia and Russia — 16% and 14%, respectively.
- In the US and Austria the prices increased by 10%, in the UK — by 9%, in Germany — by 8%.
- Among 56 analysed countries, the lowest increase in prices was recorded in Japan, India, Singapore and Italy — by 5%, 4%, 2.5% and 1%, respectively.
According to the report, widespread vaccination in the coming year may have a positive effect on the real estate market. Kate Everett-Allen believes that house prices will fall due to insufficient economic stimulus in a number of countries. However, the lifting of travel restrictions is supposed to mitigate this trend since international buyers will once again come to the markets.