Real estate prices will continue to skyrocket in 2022.
The two main reasons for this are due to -household savings and infrastructure.
#1 People are saving more money
It is interesting to see how household savings have increased significantly since the the start of Covid.
Government subsidies kept income high, but people staying in their homes didn’t have to spend too much.
Check the graph below to see the boom in household deposits.
This means that many households are holding a lot of cash especially the young age group of the prime homebuyers.
The next question is where are they going to spend it? Whether they will spend it on consumer goods or invest in it.
Perhaps much of the money will go to deposits in housing and investment real estate, stimulating real estate demand.
This is clearly a global phenomenon, as household deposits have skyrocketed by $ 3.7 trillion in developed countries.
# 2 Infrastructure boom
During peak of Covid the government invested in particularly profitable infrastructure projects.
This increases the value of the land. For example, when new roads are built, new land will be easier to access and prices will rise. Therefore, infrastructure boom = rising real estate prices.
The current boom is likely to continue beyond 2022 and will be enormous.
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