Why are house prices rising around the world?

Originally written as a column for insidehousing.co.uk

News that house prices are rising at their fastest rate since 2004 highlights both the perverse effects of the pandemic and long-term problems with affordability.

Average prices across the UK rose by 13.2 per cent in the year to June according to the official UK House Price Index  with Wales and the North of England leading the way.

While a low level of transactions suggests a need for some caution in interpretation, the same pattern has emerged in other house price surveys of double digit inflation led by regions outside London and the South East.

That confounds expectations at the start of the pandemic of recession about a declining market. The stamp duty holiday announced last Summer looks like an expensive mistake that has just helped fuel house price inflation.

In normal circumstances a bust might well follow the boom but continued support for the market will come from the estimated £180 billion in savings  that households have built up during the pandemic and the wealth gap  between housing haves and have-nots seems set to widen still further.

There is evidence of the same pattern emerging in housing markets around the world: annual house price growth across the 38 richest nations has more than doubled during the pandemic to hit 9.4 per cent, according to the OECD.