One factor depressing house prices is the large number of “distressed” home sales. A distressed sale occurs when a borrower sells a house through a short sale or when a lender sells a property that it acquired through a foreclosure; these sales have represented about half of all home sales in recent months.
The second force that can impinge on price stability is public indebtedness. The level of public debt in many jurisdictions has increased rapidly because of the pandemic, and factors such as population ageing will increasingly put further pressure on public finances. Clearly, it is of paramount importance that sufficient fiscal restraint and debt sustainability should be key priorities going forward.