Global house prices: the road back to earth
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As mortgage rates rise and housing affordability decreases, a correction in global home prices is underway. We see an orderly re-adjustment over the coming 12-24 months.
- A prevalence of fixed mortgage rates, macroprudential regulation, and ultralow "locked in" rates will help avoid widespread loan defaults.
- A silver lining for the economy could be disinflationary pressures, including through lower rents increases.
- However, the housing outlook will also have negative impacts, such as providing a strong headwind for the construction sector, which accounts for around 6% of global GDP.