Global housing price outlook in 2023 – Tejaratnews

According to Tejarat News, according to the global housing price index report published by “Knight Frank” real estate consulting company, global housing prices grew by only 3.6% in the 12 months ending with the first quarter of this year, while in the previous quarter have witnessed an increase of 7.5 percent. This increase was the slowest growth rate since 2015. The last peak of this index was related to the 12 months ending in the first quarter of 2022 following the Corona epidemic, when its growth rate reached 11.1%.

Knight Frank’s report noted at the time of publication that although the latest data showed a significant slowdown in annual price growth, seasonal growth had improved; So that global housing prices, which witnessed a contraction of 0.6% in the last quarter of 2022, increased by 1.5% in the first three months of this year. Despite this, the experts of this real estate consulting company believe that this trend is not a definite confirmation of the beginning of the improvement of the global real estate market, however, it confirms the fact that factors such as the limited supply of housing, the reduction of new construction projects and the increase in the rate of family formation have strengthened the price floor. have became.

Global housing prices return to the upward trend

Despite this, a new Reuters poll shows that the recent price slump is almost over, from the perspective of housing market analysts. They now expect that the average global housing price in the world’s major markets will have fallen less than what they imagined at the beginning of the year and will return to the upward trend in 2024.

From the analysts’ point of view, factors such as the increase in household savings, the low supply of housing and the increase in immigration have limited the drop in prices, and the experts’ prediction of a significant drop in prices due to the growth of mortgage interest rates has not been realized so far.

It is noteworthy that the jump in mortgage rates as a result of the increase in interest rates by central banks has not affected all stakeholders. Many homeowners, especially in America, who have received cheap loans during the long period of interest rates close to zero, do not have the decision and motivation to move their homes, so that these conditions have limited housing supply and market mobility.

This is not good news for first-time homebuyers, who have already been marginalized by limited supply and during the Covid pandemic, when prices have skyrocketed, the ability to compete with those who have They used to own the house and could offer a higher price, but they didn’t.

The results of the latest polls about the economic situation, especially in countries such as the United States, Canada, New Zealand and Australia, which have had the fastest growth rate of housing inflation, have challenged the assumption that the next step of most central banks will be to reduce interest rates. In fact, much of the optimism about the sooner-than-expected stabilization of these markets stemmed from speculation that interest rates had peaked and would begin to decline by the first half of next year.

Liam Bailey, head of research at Knight Frank, says: Due to the problems caused by the covid epidemic and the disruption of the production chain, the supply of housing and the volume of construction have decreased greatly, and at the same time there is strong demand in most western markets. According to him, the main point is that strong demand is met with weak supply.

A Reuters survey conducted in the second half of August of more than 130 analysts familiar with real estate markets in the United States, the United Kingdom, Germany, Australia, New Zealand and India shows that experts have generally increased their estimates for this year and next, and only The Chinese market is excluded from this optimistic view.

Forecasts indicate that housing prices in the United States will remain stable this year and next. This is while in the surveys of May and March, the predictions were that the prices will decrease by 2.8 and 4.5 percent, respectively.

Experts also expect house prices in New Zealand and Canada, which rose 40 to 50 percent during the pandemic, to fall by about 5 percent this year before rising by 5 percent and 2 percent in 2024, respectively. These estimates are an upgrade from the previous survey, which expected an 8-9 percent drop in 2023 and a 2-3.4 percent increase next year.

Analysts also predict that average prices in the German housing market will drop by 6.5% this year and remain unchanged next year. In the case of the UK, a 4% decrease is predicted for this year and no price growth for next year.

It seems that purchasing power will remain an important issue in the whole world. The majority of participants in a recent survey believe that the purchasing power of first-time homebuyers will weaken next year. “Mortgage interest rates will continue to rise, putting further pressure on affordability,” a housing economist told Reuters.

But in any case, it is clear that due to the dominance of housing demand over supply, average rents will grow and the situation of tenants will worsen. In response to a question about the state of the rental market, nearly two-thirds of analysts said that they expect conditions to become more difficult for tenants.

Source: World Economy