The global residential real estate market is expected to record 9% growth beyond pre pandemic levels from 2022 according to statistics shared by Research and Markets.
Today, some 55% of the world’s population 4.2 billion inhabitants live in cities. This trend is expected to continue. By 2050, with the urban population more than doubling its current size, nearly 7 of 10 people in the world will live in cities. Most of this urbanisation is occurring in the developing world in cities such as Lagos, Bangalore, Beijing and many other Asian, African and Latin American cities. In fact, of this projected growth, India, China and Nigeria are expected to account for 35% of this growth in global urban population.
With more than 80% of global GDP generated in cities, urbanization can contribute to sustainable growth if managed well by increasing productivity, allowing innovation and new ideas to emerge. However, the speed and scale of urbanization accelerates the demand for affordable housing.
Major cities in emerging nations such as India, China, Brazil, Argentina, and South Africa, among others, are fast expanding and require additional housing to accommodate people migrating from various regions of the country.
Furthermore, government measures promoting affordable housing stimulate market expansion. For example, governments in Australia, the United States, and Canada have planned strategies such as concessions for first-time buyers, veterans’ subsidies, a golden visa, low-cost affordable housing schemes, and a reduction in transactional taxes, all of which are expected to boost growth in the residential real estate market. Even the low mortgage interest rates are also fueling the residential real estate market in countries like US, Canada, India, Australia etc.
In recent years in Australia, there has been substantially more land released for low-density in growth corridors of major cities. As a result, we’ve seen the uptick in first-home buyers. There is a shift to a shared urban lifestyle in apartments with 30%of Sydney homes being as apartments.
Since there is a growth of Tier 2 and Tier 3 cities across the Asian Countries like India, China etc., there is a huge surge in the housing demands in these cities and the Urbanisation in these countries driving the Residential Real estate.
The Lending Mortgage rates also affect the Residential real estate market through the cost of financing a home purchase. Most Americans take out a mortgage to purchase a home, and Introduction to U.S. Economy: Housing Market mortgage debt accounts for about 70% of all household debt. The Federal Reserve’s aggressive interest rate reduction and quantitative easing drove down Treasury yields, lowering mortgage rates as well.
Industry experts say the current residential boom emerged from a cocktail of low interest rates, booming demand and supply bottlenecks. In short, it’s a situation that many are feeling acutely with no single policy to blame and no easy fix.
The extraordinarily low mortgage rates that have helped intensify housing market demand are expected to continue creeping higher in 2022, Thus this is pushing Residential Real estate market.