BENGALURU (Reuters) – A Reuters poll of housing analysts shows that the global house price boom is coming to an end. It will be affordable.
The ultra-low interest rates and strong demand from remote workers that have driven home prices above not only real wages in most major countries but also their respective stock market returns are now coming to an end.
What’s not over is rising consumer inflation, which is above most central banks’ target ranges and, in some cases, at a multi-decade high, readying more interest rate hikes in the coming months. is ready.
That doesn’t bode well for a sector sensitive to rising interest rates at a time when many new homeowners bought homes at the peak of the multi-year housing boom.
“Mortgage rates have already changed significantly from their record lows just over a year ago and will start to hurt household budgets,” JLL’s EMEA.
A Reuters poll of more than 100 housing strategists conducted between Aug. 12 and Sept. 2 found that nearly all nine major housing markets saw home prices fall three months ahead of the next two years. It was shown to decelerate more than predicted.
Only India and Dubai were expected to register modest gains, but those median estimates were about the same as in the May poll.
Despite that softening outlook, a crash in house prices was not a view shared by most analysts. This was because strong labor markets across advanced economies were expected to limit rising delinquency rates.
But most analysts said that prices were already so high that the low-single-digit gains expected from here, and possibly even outright declines, would not be enough to make them affordable. rice field.
Supply has also not improved as housing construction is not expected to keep up with demand.
Liam Bailey, head of global research at Knight Frank, said: “Affordability is deteriorating and a significant price adjustment will be required to really return to the affordability metrics of six months ago. right.
Bailey said the most likely short-term outlook for the real estate market is a gradual slowdown in sales as sellers are reluctant to admit the market is down and need to lower their asking prices. It is to do.
Graphic: Reuters Survey – Global Housing Markets (https://fingfx.thomsonreuters.com/gfx/polling/gdpzyxwwdvw/Reuters%20Poll%20-%20Global%20housing%20markets.PNG)
But even if prices begin to fall in most markets as expected next year, analysts are only calling for a modest cap on average price gains over the past few years.
If the homes were rated as expensive, analysts said prices would need to be in the double digits or close to that level for prices to become affordable.
Polls show average home prices are 45%, 35% and 40% higher than the pandemic in the three most overvalued markets – Canada, Australia and New Zealand – by 17.5%, 17.5% and 17.5%, respectively. It should drop by 20%. , to bring back affordability. [CA/HOMES] [AU/HOMES]
Polls show that UK house prices need to fall 8.5% to become affordable, the lowest among developed countries. [GB/HOMES]
In Germany and the US, where interest rates are currently rising sharply, these figures were 15% and 10%. [US/HOMES]
ING Chief International Economist James Knightley said of the US market:
“It’s a recipe for some sharp fixes in some previous ‘hot spots,'” he said.
(For more stories from Reuters’ quarterly housing market poll:)
(Reporting by Hari Kishan; Other reporting and polls by Jonathan Cable, Indradip Ghosh, Prerana Bhat, Vijyalakshmi Srinivasan, Milounee Purohit, Devayani Sathyan, Vivek Mishra, Arsh Mogre, Anant Chandak, Susobhan Sarkar; Ross Finley and Bernadette Edited by Baum)
Copyright 2022 Thomson Reuters.
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