Global real estate markets: rich valuations, but not a source of systemic risk

Among the legacies of the Covid-19 crisis, we have – first and foremost – the surfacing of a renewed inflation regime. Signs of this trend emerged in 2021, with price rises not seen for decades across the world. This dynamic has been compounded by the Russia-Ukraine war, which has significantly hiked energy prices and exacerbated pre-existing supply-chain bottlenecks.

This has encouraged investors to broaden their investment landscape in an attempt to preserve their investments’ real value. In this respect, an obvious option has been to look at global real estate markets. Despite the Covid-19-driven economic shock, house prices have continued to rise in most developed markets (DM), as well as in some emerging markets (EM). The current situation differs across regions. Even so, the fact that prices are rising simultaneously in different countries raises the issue of a possible ‘common factor’ underpinning the increase.

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