Why house prices are surging once again

I s a fresh housing boom under way? In April a house-price index for the world, excluding China, rose by more than 3% year on year (see chart 1 ). American house prices are 6.5% higher than a year ago, Australian ones have increased by 5% and Portuguese ones are soaring. In other countries, the market looks surprisingly strong given years of high interest rates (see chart 2). These figures follow a tough period. Adjusted for inflation, prices have fallen by 20% in Canada, Germany and New Zealand. They are well off their peaks in some American cities, including San Francisco and Phoenix. In Boise, Idaho, where prices soared during the covid-19 pandemic as people sought living space, values are down by over a tenth. Meanwhile, higher interest rates, and mortgage costs, have made people worried about their spending on housing: the share of Britons who say they find it “very” or “somewhat” difficult to make rent or home-loan payments has risen from 24% in early 2022 to 41%. Yet it is surpr

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