Global Housing Market Outlook Improves Despite High Interest Rates

Despite high interest rates, most of the world's major housing markets have seen an improvement in outlook over the past few months, according to a new Reuters poll of property analysts.

Despite high interest rates, most of the world's major housing markets have seen an improvement in outlook over the past few months, according to a new Reuters poll of property analysts. While home prices skyrocketed as the Covid-19 pandemic swept across the globe, some markets saw price increases of over 50%. However, the rate of decline has been modest over the last year, as central banks raised interest rates.

Although higher borrowing costs do impact the housing market, it remains relatively resilient and sensitive only in the short term. Low unemployment and surges of post-pandemic immigration have supported housing demand in developed markets with continued tight supply.

Global Housing Market Outlook Improves Despite High Interest Rates

While house prices have rebounded in some markets, this has complicated central banks' overall efforts to control inflation since rents can account for as much as a third of the basket of measured goods and services.

The latest Reuters polls conducted between May 15 and June 5 show house prices in the US, Canada, Germany, Australia, and New Zealand stagnant or slightly falling from what analysts had predicted three months prior. However, most markets still face downside risk due to the trend of interest rates and the lagging impact of higher mortgage rates.

The majority of analysts (out of 81 respondents) see home prices as more likely to decline than to recover, with peak-to-trough declines for nearly all housing markets being downgraded in the latest Reuters survey compared to the March survey. Family investment offices in Asia are also showing a negative sentiment towards real estate as they are concerned about high interest rates and the risk of recession, with many planning to reduce the amount of capital allocated to real estate in the next 12 months.

Overall, while there may be some challenges ahead for the housing market, the outlook appears to be improving, and many experts believe that the market will continue to grow in the coming years.