COVID-19: housing market impacts and housing policy responses - an international review
Two years after the outbreak of COVID-19, this report analyses pandemic impacts on housing systems across a range of high income countries during this period, and documents a range of policy responses relating to housing and homelessness. The review arises from parallel studies initiated in mid-2020 by the UK Collaborative Centre for Housing Evidence (CaCHE), focused on the UK, and by the University of New South Wales, covering Australia.
Mainly undertaken in Q3/Q4 2021, the current study also encompassed six other developed countries: Canada, Germany, Ireland, New Zealand, Spain, and the US. Country selection was influenced by the need to include jurisdictions comparable with the UK and Australia, while also encompassing diversity in relation to housing regime type and national governance systems.
- Defying initial expectations, many countries have seen surging housing markets during the first two years of the COVID-19 pandemic. By late 2021, for example, both prices and rents were escalating at historically high rates in Australia, the UK and other Anglophone nations.
- During the period from early 2020 to late 2021, nominal house prices rose in all eight case study countries included in this research – Australia, Canada, Germany, Ireland, New Zealand, Spain, the UK and the US. In sharp contrast to the 2008 Global Financial Crisis, none of the countries has seen any significant periods of nominal price decline.
- It is the Anglosphere countries where the pandemic house price boom has been most evident. By Q3 2021, annual nominal house price inflation had reached 22% in Australia and New Zealand, 18% Canada and USA, 12% in the UK and 11% in Ireland.
- Booming housing markets during COVID-19 are probably mainly due to the rock-bottom interest rates and quantitative easing measures that have also formed part of official economic stimulus in many countries. Pent-up household savings will also have contributed.
- Less widely reported than booming prices, housing rents also took off during 2021 across most of the countries in our research. Whereas several countries had restricted rent increases in the early ‘income shock’ phase of the pandemic, almost all had lifted these restrictions when rents began rising, on shifts in demand.
- Overall, in most of the eight countries covered in this research, rising house prices and rents during 2020 and 2021 will have resulted in generally declining housing affordability. In five of the six countries for which national statistics are available, nominal rent increases (usually in the range 10-15%) exceeded wage increases in the two year period to late 2021.