Latest News

Curtains drawing on runaway rise in global house prices- Reuters poll

0

Curtains drawing on runaway rise in global house prices- Reuters poll By Reuters

Breaking News

‘;

Economy 2 minutes ago (Sep 06, 2022 01:15)

© Reuters. A general view of apartments under construction near Wandsworth Bridge in London, Britain, January 10, 2022. REUTERS/Kevin Coombs

By Hari Kishan

BENGALURU (Reuters) – A runaway surge in global house prices is drawing to a close as interest rates rise along with the cost of living, according to Reuters polls of housing analysts, who said prices needed to fall in double digits in several key markets to turn affordable.

Ultra-low interest rates and strong demand from remote workers which helped house prices in most major economies to outpace not only real wages but also returns on their respective stock markets was now coming to an end.

What was not ending yet was the rise in consumer inflation, which is above most central banks’ targeted ranges and in several cases at multi-decade highs, setting the stage for more rate hikes to come over the coming months.

That doesn’t bode well for a sector which is sensitive to higher interest rates at a time when hordes of new home owners have bought homes at the peak of a multi-year boom in housing.

“We’ve seen material changes of course already in mortgage rates ticking up from the record low rates of a year or so ago…(which) will begin to bite households,” said Adam Challis, executive director of research and strategy for EMEA at JLL.

Reuters polls of over 100 housing strategists taken Aug. 12- Sept. 2 showed house prices in nearly all the nine major housing markets to slow over the next two years by more than was predicted three months ago.

While only India and Dubai were forecast to post some marginal gains, those median estimates were nearly identical to the May poll.

Despite that tempered outlook, a crash in house prices was not a view shared by most analysts as strong labour markets across the developed world were expected to keep delinquency rates from rising.

But most analysts said prices were already so high that even the low single-digit rises predicted from here, or in some cases outright falls, weren’t enough to make them affordable.

Supply isn’t improving either as house building is not expected to keep with demand.

“Affordability has worsened and it would take quite a large price adjustment on the way down to actually kind of get back to the affordability metrics we were at six months ago,” said Liam Bailey, global head of research at Knight Frank.

Bailey said the most likely near-term outlook for property markets is that turnover slows to a trickle as sellers are reluctant to admit the market is falling and they need to cut their asking prices.

GRAPHIC: Reuters Poll – Global housing markets (https://fingfx.thomsonreuters.com/gfx/polling/gdpzyxwwdvw/Reuters%20Poll%20-%20Global%20housing%20markets.PNG)

But even when price declines kick in for most markets as predicted next year, analysts are only calling for a small dent in how much average prices have risen over the last few years.

Where housing was rated expensive, analysts said prices need to fall in double digits or close to that level to become affordable.

Canada, Australia and New Zealand, the three most overvalued markets according to the poll, where average house prices have risen by 45%, 35% and 40% over the pandemic, need to fall 17.5%, 17.5%, and 20%, respectively, to get back to affordable. [CA/HOMES] [AU/HOMES]

UK house prices need to fall 8.5% to become affordable, according to the poll, the least among developed countries. [GB/HOMES]

In Germany and the U.S., where rates are now sharply on the rise, those figures were 15% and 10%. [US/HOMES]

James Knightley, chief international economist at ING, noted of the U.S. market that “with borrowing costs having nearly doubled we see demand dropping sharply in terms of mortgage applications for home purchase just at a time when supply is really being ramped up.”

“This is a recipe for some sharp corrections in several former ‘hot spots’,” he said.

(For other stories from the Reuters quarterly housing market polls:)

Curtains drawing on runaway rise in global house prices- Reuters poll

HSBC and Metro bank join Britain’s Stop Scams hotlineBy Reuters – Sep 06, 2022

By Huw Jones LONDON (Reuters) – HSBC (LON:HSBA), its online arm First Direct, and Metro Bank have joined a fraud-reporting hotline as the cost of living crisis increases the…

Liz Truss to replace Boris Johnson as British PM on TuesdayBy Reuters – Sep 06, 2022

LONDON (Reuters) – Liz Truss will replace Boris Johnson as Britain’s prime minister on Tuesday, travelling to see Queen Elizabeth in Scotland before appointing a new team of top…

UK shoppers, feeling the inflation hit, cut back on non-essentialsBy Reuters – Sep 06, 2022

By Humza Jilani LONDON (Reuters) – British shoppers are cutting back on purchases of clothes and other non-essential items as they try to cover their sky-rocketing utility bills…

Our Apps



Terms And Conditions
Privacy Policy
Risk Warning

© 2007-2022 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

HSBC and Metro bank join Britain’s Stop Scams hotline

Previous article

Japan ex-PM Abe’s state funeral to cost over $12 million

Next article

You may also like

Comments

Leave a reply

Your email address will not be published.

More in Latest News