While the American housing market has seen a volatility not experienced for some years, the rest of the world is a bit more stable. MarketWatch has highlighted that there is now considerable foreign investment in US real estate stemming from stability in the origin countries of investors, with a 31% drop in previous purchases now being reversed across the USA. Positive outlooks in foreign real estate markets have had an impact on the global industry even post-2008; a look at how Australia is getting back on its feet provides an insight into how.
Australian market
The Australian market had a boom all of its own, but it’s also been matched with huge lending – something not seen as frequently in the US market. Comparison and interest rates have been maintained throughout the boom and this has seen a rise in lending. According to News.com.au, that has seen a surge in the amount of lending dispensed, and an overall lower level of equity across the Australian real estate market. This may spell trouble in the future for the Australian market – subprime lending is a risky business after all – but it does free up capital and generate new revenue for banks, which is then turned into international investing more frequently than not.
Britain’s boom
The same effect is being seen in the UK. A boom in house prices has seen its epicenter in areas not typically associated with high house prices. Equity is rising in those areas and that means more money is being dispensed with for capital investment. The global real estate market remains tightly linked, especially in the Anglosphere, and that means rising house prices in the UK are generating revenues to be put towards investment in the USA. With the infrastructure bill on the way, global investors are looking to the USA as a potentially fertile ground for their cash injections.
Infrastructure plan
The infrastructure plan is a big part of the current US administration’s long-term goals. President Biden has highlighted his view that the US will fall behind to competitors like China if they are unable to push through crucial infrastructure changes. The side-benefit of these changes will be a much broader and profitable real estate market. While rising house prices and lending that benefits the banks are nice for short-term growth and prosperity, the long-term health of the real estate market depends on factors further afield than short-term spending. Many house price rises and new applications are focused on cities and regions already well-developed in terms of their real estate markets. This will change the outlook so that wider regions become affordable and lucrative areas for development, by virtue of road and rail connections.
America’s real estate market is the biggest in the world. It’s also linked, intrinsically, to the markets of other highly developed countries. Where they go will often be where, to some degree, America follows, and that’s being seen now.