Global house price fall underway won’t do much for affordability, say analysts – Yahoo Finance

By Hari Kishan and Indradip Ghosh

BENGALURU (Reuters) – House prices in most major property markets will fall in 2023, according to nearly 100 housing market analysts polled by Reuters, but they predicted double-digit peak-to-trough declines will not come close to making them affordable.

Mortgage rates have doubled on average in developed economies since the start of the year as their central banks fight runaway inflation with higher interest rates. With a few more hikes still expected to come, that trend was unlikely to reverse in the short-to-medium term.

House prices in the United States, Canada, Britain, Germany, Australia, and New Zealand rose between 25% and more than 50% since the outbreak of the coronavirus pandemic in early 2020.

That rally, lit by rock-bottom rates and a scramble by millions who shifted to work from home to find more living space, pushed properties further out of reach for many first-time homebuyers.

While most markets are now retreating from highs, there appears to be very little solace for those still dreaming about their own homes.

Among the nine housing markets surveyed, prices in six were expected to drop next year. Only China’s beleaguered property market, alongside outliers India and Dubai, were forecast to rise, according to latest Reuters polls. Graphic: Global housing price outlook,

But while house prices in developed economies are expected to fall between 10% and 18% from peak-to-trough, led by New Zealand, those predicted declines would amount to just about one-third of the pandemic era gains.

And while before the pandemic analysts had categorized house prices as fairly valued or only slightly overvalued, now they rate them consistently as moderately expensive in most markets, even as rising borrowing costs and inflation weigh on demand.

“Higher mortgage rates will weigh heavily on demand and home prices through 2023 and into 2024. Cost of living increases will also

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