Housing Demand Looks Strong in North America Through 2021November 27th, 2017 by Editor
North America is poised to post the fastest gains in new housing construction of any global region through 2021, according to a new study from the Freedonia Group, a Cleveland-based industry research firm.
The annual growth rate for new housing units in North America is projected to be 4 percent per year. It will be driven by above-average household formation in Mexico as well as strong single-family housing construction activity in the U.S. The size of an average North American housing unit is forecast to grow to 145 square meters in 2021, making North America’s existing floor space the second largest behind only the Asia/Pacific region, which had nearly six times as many housing units as North America in 2016. That could also mean increased demand for windows and doors.
Many developing nations in Central and South America, Africa and the Middle East face extreme shortages of formal housing. Because of that, governments in many countries in those regions have enacted national housing programs. They vary in scope from providing free housing to offering significant subsidies for home loans and rental units
Freedonia says China and India will continue to dominate the global housing market through 2021, representing a combined share of 43 percent of all new housing units. Growth will be supported by above-average gains in residential building construction, particularly in India, where growth is projected to be more than double the global average. Additionally, new household formation and rising incomes for the under-30 population in these countries is creating a large pool of first-time homebuyers. Following declines during the 2011-2016 period in China, large-scale urbanization projects will promote the rebound of new multifamily housing units.
Surging housing prices and household debt throughout Western Europe could indicate a new housing bubble, according to Freedonia’s analysis. Germany’s central bank estimated in early 2017 that the housing market is overvalued by as much as 30 percent, and in 2016, the nation accounted for 19 percent of the EU’s outstanding mortgage value. In Sweden, average housing prices grew 15 percent between 2015 and 2016, faster than any other EU country, and household debt as a percentage of income reached 350 percent. To ease fears, Denmark and Norway enacted policies to restrict mortgage lending. In Spain, the economic recovery inches forward after years of downturn, as average housing prices increased for the first time in eight years in 2015 and foreclosures fell by over 30 percent in 2016.
For in-depth analysis of these and other trends, see Freedonia’s Global Housing Outlook, 7th Edition.