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Price increases are unsustainable, according to UBS, in the face of government stimulus, mortgage bailouts, and low interest rates.

"Higher unemployment and a bleak outlook for household incomes have yet to have an effect on home prices. However, the growth seen over the last four quarters is clearly not sustainable in the short term "UBS Global Wealth Management's chief investment officer, Mark Haefele, said in a statement. "Rents have already begun to fall in most cities, suggesting that a correction period will likely emerge as subsidies fade and income pressure increases." for sale qatar

HRE Investments' Bartosz Turek also mentions the "major link" between interest rates and house prices, telling DW that he believes this is the primary cause of the world's soaring real estate prices. "I see that prices have risen so dramatically in some European markets that this is worrying, and a price drop is inevitable," he said.

Turek points out that for a long time, prices have risen faster than wages. In most countries, this was supported by extremely low interest rates.

According to Eurostat, the European Union's statistics agency, house prices in Slovakia increased by 43 percent between 2012 and 2019, while the average Slovak household income increased by just 4%. In Germany, house prices increased by 43% while incomes increased by 19%. Prices in Sweden increased by 53%, while incomes increased by 18%. It was 45 percent and 17 percent in Austria, respectively. Finally, home prices in Hungary nearly doubled, and wages were 43 percent higher in 2019 than in 2012.

Looking forward

According to some housing sector experts, the market will be put to the test in the second half of this year as government stimulus measures come to an end. In the United States, for example, over 20% of the 110 million tenants are at risk of eviction as rent payment moratoriums imposed by Covid-19 limits begin to expire.

"Looking forward, a poor economy, tight credit conditions, and the end of these short-term factors supporting demand would hold back growth in house prices next year," Hansen Lu, an economist at Capital Economics in London, told DW, predicting that housing prices will remain stagnant in 2021.

House prices in Spain are expected to drop between 8% and 12% in 2020, according to analysts at global ratings firm Fitch Ratings, while prices in Australia are expected to drop between 5% and 10%, and in the United Kingdom up to 7%.

A drop in house prices will reduce asset capital, reduce homeowners' borrowing ability, and jeopardize investment in productive areas of the economy. However, it will ease pressure on those who are experiencing lower real incomes, unemployment, and increasing rent.

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