Helped along by rapid household formation in Mexico and increased construction across the United States, North America will post the fastest gains in new residential development—even as indications of a housing bubble emerge in Western Europe, according to a new study released Monday.

The Global Housing Outlook study projects a 4-percent increase in residential units across North America through 2021 while also highlighting a surge in housing prices and debt in Germany, Sweden, Denmark and elsewhere in Western Europe that could be indicative of a growing bubble, according to The Freedonia Group, a Cleveland-based industry research firm.

The average North American housing unit, meanwhile, is projected to rise to 1,560 square feet by 2021, placing the continent’s existing floor space second only to Asia and the Pacific Rim, which in 2016 boasted nearly six times as many housing units, according to the study.

:Although housing completions in the US are expected to post strong gains, completions will remain below their previous cyclical peak through 2021,” the authors of the study write.

“Increases in living standards in Mexico will contribute to regional gains as more households will be able to purchase or construct a house. In North America, construction of single-family units, which is expected to reach 2.0 million in 2021 on annual growth of 4.4%, will post more rapid gains than that of multifamily units, driven by strong advances in US single-family housing. Construction of multifamily units is projected to increase 3.0% annually to 730,000 units in 2021.”

In an indication that Western Europe may be heading for a bubble burst, Germany’s central bank estimated that its own housing market is overvalued by as much as 30 percent, as German news site DW Akademie reported, with the nation representing as much as 20 percent of the Eastern Union’s outstanding mortgage value.

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In Sweden, average housing prices soared 15 percent between 2015 and 2016, and household debt as a percentage of income peaked at 350 percent, according to the study. In Denmark and Norway, meanwhile, new restrictions on mortgage lending were enacted to curtail a looming financial crises. In one bright spot, however, average housing prices in an economically rebounding Spain increased for the first time in eight years while foreclosures fell by 30 percent in 2016.

Meanwhile, the study also notes that China and India will drive 43 percent of all new housing development, continuing a streak buoyed by above-average gains in residential construction, urban migration and rising incomes for young professionals across both regions.

“On a global basis, multifamily units are forecast to experience faster gains in new construction than are single-family units, the result of increasing urbanization in developing countries,” according to the study’s authors.

“Rural-to- urban migration will be particularly strong in the most populous region – Asia/Pacific – and those new urban residents will boost demand for multifamily housing due to the high cost of single-family housing in urban areas and the majority of government subsidized housing in these areas consisting of multifamily units.”

Email Jotham Sederstrom

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