Higher house prices will worsen intergenerational tensions, as would-be homebuyers are locked out of the property market
not had a good September, but their strength for the year as a whole remains a source of wonderment. Less noticed has been the equally remarkable buoyancy of another asset class: housing. Many rich countries are seeing house prices surge even as their rate of infections is rising for a second time. In the second quarter, although economies were under lockdown, house prices rose in eight out of ten high- and middle-income countries.
The house-price boom is not just a result of policy, however. Structural forces are at work, too . Job losses this year have been concentrated among low-paid service-sector workers, who are more likely to rent than buy.
Perhaps the boom will cool as government support for the economy falls. However, the effect of the pandemic on long-term interest rates is unlikely to change; nor is the desire for roomier homes. Higher house prices could turn out to be an enduring legacy of covid-19. If so, in the 2020s they will deepen the intergenerational tensions that were already emerging in the 2010s.
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