The housing market is highly cyclical, and the current price boom marks the fifth episode since 1970 where real house price growth has exceeded 5% y/y. But there are good reasons to think this will mark the last house price boom for next 30 years. Interest rates are already at record lows, and we expect they will rise gradually over the next 30 years. New regulations mean credit conditions have not loosened even as house prices have boomed, and that argues against a repeat of the mid-2000s boom. Overall, once the current cycle has passed, we expect house prices will grow more-or-less in line with earnings, leaving real house price growth at around 1.5% y/y from 2030 to 2050.
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