Over the past century, the global housing market has undergone significant changes, influenced by economic cycles, political events, demographic shifts and technological advances. Major events, such as the Second World War or the bursting of the mortgage bubble in the mid-2000s, have caused abnormal market fluctuations. Analysing them can provide useful information about past trends, help navigate the present and predict the future. The property market is a fundamental pillar of the economy and, in some regions, its most important sector. It is shaped both by global political and economic processes and by the conditions of a particular country. From its inception to the present day, the market has been in a constant state of flux. This blog presents a century of developments and changes in the global housing market.
The essence of the housing market
The global housing market is a commercial platform that generates demand and supply for land and a full range of housing options, both for sale and for rent. It also provides the terms and instruments for financing these transactions. The market operates under the influence of several factors, including:
- banking sector interest rates;
- economic conditions of global,
- continental or national significance;
- demographic and migration processes;
- government policy in each country.
The residential property market can influence and reflect the state of a country's economy, forcing it to regulate the level of consumer spending and demand. In addition, the market can have a directional effect, for example on the construction industry or the production of materials used.
Historical periods
There is a direct relationship between the population of any country and its housing market. The role of a socially responsible government is to create conditions in which every family has the opportunity to own a comfortable home. During the historical periods, these processes took place as follows:
1920 - 1945
In 1922, the tomb of Pharaoh Tutankhamun was discovered in Egypt, which in turn influenced the Art Deco style that was often used to design homes at the time. New materials such as concrete and steel began to be used on building sites. The following decade saw the Great Depression in the United States and the rise of Nazism in Europe. These events had a negative impact on the global housing market and caused most households to lose the ability to pay their loans, also due to mass unemployment. The Second World War caused a pause in housing construction as all resources were diverted to the war effort. In the post-war period, many governments set up special agencies and funds to help their citizens find a roof over their heads and to revive the housing market. In particular, several states enacted Military Benefits Acts to provide affordable mortgages for veterans.
1945 - 1970
These years saw a global housing boom. The devastated Europe is rebuilt, and on the North American continent, there is so-called suburbanization, or a rapid increase in demand for suburban housing. The Soviet Union rises from the ruins, where the government's main task is to move people out of cellars and communal flats and into private homes. There is a significant demographic upsurge on the planet, migration processes are suspended.
1970 - 2000
A period of global ups and downs in interest rates. As the post-war generation reached the age of independent property purchase in the early 70s, banks began to raise their interest rates. After easing conditions in the late 1990s, sustained demand resumed in the new millennium. During the same period, new players such as South Korea, the UAE and Brazil entered the global market. The development of technological platforms in the property sector has streamlined the process of buying and selling property, making information more accessible and structured.
2000 - 2009
This period saw a reduction in lending rates and the liberalisation of lending rules, which led to an increase in the number of mortgages, including to borrowers with low credit ratings, particularly in the most capacious market - the US. As the number of risky lenders increased, the so-called "credit bubble" in the housing market began to inflate. As new loan repayments came due, the housing market collapsed, leading to the global financial crisis and the Great Recession of 2008.
2010 - 2020
Years of overcoming the crisis and a significant change in global lending practices. Thanks to the measures taken and the rethinking of pricing policies in response to the recession, the housing market begins to recover and prices exceed pre-crisis highs. Ultra-tall skyscrapers are being built in certain regions, setting world records for building height and demonstrating technological superiority.
Covid - 19
At the height of the pandemic, there was a significant drop in property market activity worldwide. With the construction industry at a standstill and a reduction in the number of new projects, the prices of completed properties began to rise. Residents showed a desire to move out of densely populated neighbourhoods and demand for private homes rose sharply due to health concerns.
The law of supply and demand has always been an important factor in the housing market.
The relationship between supply (the resource) and demand (the desire for the resource) is the driving force behind the market. At different times and in different regions, this relationship has shifted in one direction or another. In particular, in a number of holiday destinations, the purchase of housing for rental income rather than ownership seems quite natural. Supply and demand criteria have been influenced by:
- the availability of land, which determines the size of plots for building;
- zoning regulations, which dictate the purpose or use of buildings depending on their geography;
- construction costs, which allow developers to respond to market conditions depending on the economic climate;
- generational trends, where investors want different properties at different times;
- migration patterns, where there is an influx or outflow of people from certain regions;
- economic conditions prevailing in a particular state at a particular time.
- In addition to interest rates, the employment rate and real income of the population are also taken into account.
Current trends in the housing market
The above-mentioned aspects can trigger certain processes in the market that affect the liquidity of properties and financing options. For example, today there is a commitment to healthy lifestyles, the construction of smart homes, and an increase in investment flows into rental or luxury properties in a particular region of the world. Growing awareness of environmental sustainability has influenced modern technology in residential construction, leading to more efficient and environmentally friendly methods of building. There is an emphasis on conserving resources and increasing demands on the quality and architecture of housing. Recent years have seen the revolutionary introduction of the latest building technologies and materials, unimaginable 20 years ago. In addition, the basic standards and technologies of construction are changing.
The property market is a huge sector of the global economy, affecting entire societies and shaping the lives of individuals. As a country develops, its housing sector reflects its cultural and technological potential. Over the past century, residential architecture has evolved from plumbing within buildings to the ability to control them remotely, including the activation of specific functions at specific times. So far, it's safe to say that the future of the residential market is opening up truly cosmic horizons.
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