Biggest property price growth in two decades


Giles, Chris, and Valentina Romei. "Pandemic Fuels Broadest Global House Price Boom in Two Decades." Financial Times, Financial Times, 1 Aug. 2021,

Property prices grew rapidly in almost every developed economy in the world during the pandemic, shaping the biggest rally in two decades and prompting worries about financial stability.

Out of a total of 40 countries included in the OECD (Organisation for Economic Co-operation and Development), only 3 reported a fall in property prices in the first 3 months of this year – Financial Times journalists found that this was the smallest proportion (3 out of 40 countries with a fall in property prices) since 2000, since data was collected.


What are the factors that are driving the growth in property prices steadily:

  • Historically the lowest mortgage rates
  • Growth in household savings during the pandemic
  • The desire for more space after the office moves home
  • Fiscal and monetary stimulus from the Fed and the ECB ('printing' and putting huge amounts of money into circulation)
  • Fear of rising inflation and money devaluation
property price growth

Rising property prices may be good for the economy in the short term because property owners feel richer and can spend more because of higher valuations of their assets.

Average annual price rise in the OECD

The average annual rise in house prices in the first quarter of 2021, after the economies of "rich nations" (OECD) recovered from the viral recession of 2020.  is 9.4% – the fastest rise in the last 30 years.

property price growth

The graph shows that house prices are rising everywhere in the northern hemisphere.

Growth in property prices

Prices are rising fastest in the US, Canada, New Zealand, South Korea, Denmark, the Czech Republic, the UK and Turkey. An interesting fact is that inflation in Turkey is high (+ 17.5% on an annual basis reported in June 2021) and Erdogan has restricted exports of money outside the country, leading to demand for security in properties.

It is interesting to note that in the three countries with the most developed tourism in the EU – Greece, Italy and Spain – property prices have not yet returned to the level of 2011 and are seriously lagging behind the oecd averages.

The most serious drop in prices is noted in Brazil, which have fallen by nearly 50% since their level in 2011.

Why are property prices actually rising?

The economic conditions for growth in property prices are extremely good in terms of mortgage lending with record low interest rates at a time of low economic activity, according to Claudio Brio (Head of monetary department at the central bank – Bank of International Settlements).

Low borrowing costs make buying a property much more attractive than rent or other investment alternatives.

In addition, many households (in particular those with middle and high incomes) were able to accumulate large savings from the start of the pandemic, with lockdowns limiting spending while many occupations were not affected. For example, in Bulgaria, the growth of deposits was 13.52% as of June 2021 compared to the beginning of the state of emergency in March 2020, according to bnb data.

The news that one of the largest banks in Bulgaria will no longer offer the deposit as a bank product, as the new "deposit fee" of 0.7% on an annual basis for deposits over BGN 400, speaks of the banks starting to "run away from deposits", which will further stimulate investments in real estate and other alternatives.

Growth in property prices

The stocks of building materials shrank significantly after supplies and logistics suffered from the pandemic, which led to a growth of 30-40% in the prices of basic building materials such as steel, wood, polypropylene pipes, etc.

Is it a balloon?

Average property prices in the OECD are growing faster than people's incomes, making housing less affordable for the average person. Prices are rising faster than rents.

Adam Slater, lead economist at Oxford Economists, says properties in advanced economies (Bulgaria is not among them) are about 10% overvalued, compared with long-standing trends. This right is the current price boom one of the largest since 1900, but in no way compares to the madness of 2005-2008 that led us to the global financial crisis.

He noted that some of the factors pushing the price up are temporary, such as tax benefits, as well as problems in the global logistics supply network.

Growth in mortgage loans is lower than in the pre-crisis period of 2008, leading to a lower risk of ballooning.

According to Denise Egan (Deputy Head of the Marco FinanceDepartment of the International Monetary Fund(IMF)),the growth in mortgage loans is driven by consumers with serious financial stability, with households in developed economies generally less indebted than before the 2008 crisis, which in turn leads to little risk of recurrence of the events of then and leading to bankruptcy and "urgent sales" of properties.

One key factor is different from the situation nearly 15 years ago: central banks, which feared the effects of the property bubble burst in 2008, are now more vigilant.

The Reserve Bank of New Zealand has added house prices to its mandate, and the ECB (European Central Bank) has asked the EU Statistics Agency to include house prices in the inflation calculation.

In summary, according to leading economists, politicians around the world are now seriously aware of the risks associated with housing policy, unlike in 2008, which significantly reduces the chances of an unfavorable outcome.

Disclaimer: Delta Analytics Foundation is a registered non-profit legal entity for the performance of public benefit activities. The materials published on the platform are for informational, educational and research purposes only in order to support the mission of the foundation and should not be perceived as specialized advice on real estate transactions. Delta Analysis Foundation is not responsible for the way you use the information contained on the site. Always turn to qualified professionals for financial, legal and other matters according to your specific circumstances and take action based on your informed choices.