NEWSEC PROPERTY OUTLOOK • SPRING 2020
PROPERTY MARKETS FOR EVER? ●
PROPERTY MARKETS FOR EVER? Klas Eklund, Senior Economist, Mannheimer Swartling
A year ago, the global outlook was bleak. All regions were slowing down and geopolitical uncertainty was on the rise. But central banks saved the day. New monetary expansion put a cushion under most economies, and over the past few months, signs of a trough and possible upturn have been visible. Property markets have continued to climb, in the Nordic countries as well as worldwide. Yet there are uncertainties: Is there a risk of new bubbles? And what will the effects of the Corona virus be? However, rates remaining low for long will constitute a strong force which will continue to support property markets. Global economy bottoming out In the autumn of 2019 and the beginning of 2020, most economic forecasters lowered their global growth forecasts for 2020. But none projected an outright recession. The consensus has rather been that the global economy would gradually start to pick up by the end of 2020, albeit slowly. One important reason is the renewed strong expansionary policy from big central banks.
In 2019, first the Federal Reserve and then a number of other central banks cut their key rates and increased the size of their liquidity injections. The ECB even launched an open-ended new phase of quantitative easing – the liquidity injections were to continue as long as needed. Given that the ECB’s own inflation forecast says inflation will remain below target for another two years at least, that means aggressive easing for the foreseeable
future. As a result, market rates fell to record-low levels. After recession fears receded, they rose slightly but remain historically low. In the US, GDP growth has gradually slowed to around 2 per cent. Not bad, after the longest expansion in American history. Unemployment is now the lowest for over half a century. But it must be conceded that the expansion has been supported not only
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