The global data is a wake-up call for policymakers, especially as fresh stimulus spending programs continue to alter every corner of the financial market. The Trump and Biden administrations, for example, have pushed trillions of stimulus spending on the U.S. economy, leaving American savers flush with cash. Meanwhile, first disbursements of Europe’s €720-billion-plus ($875 billion) Recovery and Resilience Fund are expected to begin in the coming days.

Some of that firepower is already showing up in the data. Consultancy Knight Frank said on Wednesday its Global House Price Index, which benchmarks average prices across 56 countries and territories, increased 7.3% in the year to March 2021.

“With 12 countries recording double-digit price growth in the year to Q1 2021, it is no surprise that talk of post-pandemic housing bubbles is increasing,“ the firm wrote in its quarterly update, adding the data “poses tricky questions for central banks almost everywhere.”

At an increase of 13.2% during the quarter, the United States recorded its highest rate of annual price growth since December 2005.  

In Europe, where the vaccine rollout has struggled to gain traction until only recently, gains were in many cases far more subdued. Though this could also be attributed to the fact that for a number of countries on the continent, the data from national authorities reflects the real estate market only through the end of last year.

Bargains in Italy?

Italy saw annual price gains drop to 1.6%, below its previous year’s increase, while Spain actually recorded an outright decline of 1.8%—each respectively from the fourth quarter. The duo were among the worst hit countries in Europe, both from a public health and economic perspective. The two countries also endured lengthy lockdowns in 2020 when the housing market literally froze up.

By comparison, New Zealand, one of the countries that best kept the pandemic under control, saw its housing market soar, with prices vaulting by 22%.

It was Turkey, however, that led all countries for the fifth straight quarter. Heavy-handed interventions by President Recep Tayyip Erdoğan to keep interest rates low have caused citizens to flee the Turkish lira for the safety of hard assets. Half of the country’s 32% gain in housing prices stemmed from baseline inflation effects, according to Knight Frank.

Buyer sentiment could temper going forward now that governments are starting to apply the brakes to domestic real estate speculation, and fiscal stimulus measures end later this year in a number of markets, the report argued.

The consultancy cited China, New Zealand, and Ireland intervening with a range of measures from tighter lending rules to higher stamp duties for multiple purchases. Canada is also looking closely at a national vacancy tax, while reports suggest China is considering whether to impose a national property tax. 

Data from Knight Frank showed the annual rate of gains in the primary housing market for mainland China rose only by 4.3%, well below the global average.

Fears that inflation could run red-hot if policymakers stand by idly were rekindled last week after the measure of inflation preferred by the Federal Reserve hit its strongest reading in 13 years. The U.S. Bureau of Economic Analysis’ personal consumption expenditure index jumped in April by an annual rate of 3.6%.

In America, soaring prices for new homes coincide with an epic run-up in lumber and other materials costs.

Economist attention will focus this month on the Fed and the European Central Bank. The two are set to publish their quarterly economic forecasts in conjunction with rate setting meetings, starting with the ECB on June 10.

But for homebuyers, it’s unlikely they’ll see relief anytime soon.