Global housing outlook brightens despite pressure from higher rates:
Reuters poll
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[June 06, 2023] By
Hari Kishan and Sarupya Ganguly
BENGALURU (Reuters) - The outlook for most major housing markets has
improved slightly from three months ago despite high interest rates,
according to Reuters polls of property analysts who were mostly split on
whether affordability would worsen or not.
House prices rose at a blistering pace across the developed world during
the COVID pandemic - in some cases by more than 50% - but have fallen
over the past year by modest amounts as central banks jacked up interest
rates.
Higher borrowing costs have made only a small dent on the normally
interest-rate-sensitive housing market, however, as still-low
unemployment and a post-pandemic surge in immigration have kept demand
strong amid ongoing tight supply.
The Reuters polls of around 100 analysts taken May 15-June 5 showed
house prices in the U.S., Canada, Germany, Australia and New Zealand
either stagnating or falling less than analysts had predicted three
months ago. The outlook was little changed for Britain and in India
where prices have kept rising.
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"We find that very low housing supply, stronger household balance
sheets...and support from rebounding immigration are all contributing to
the recent house price resiliency," noted analysts at Goldman Sachs.
"Our relatively hawkish rates forecasts and the possibility that we
haven't seen the full impact of higher mortgage rates yet suggest that
the risks to house price growth remain to the downside in most
countries."
Analysts across markets covered who answered an additional question were
nearly split on purchasing affordability for first time buyers, with 45
saying it would worsen and 43 saying it would improve.
Adam Challis, executive director of research and strategy for EMEA at
JLL, said strong wage gains over the past year had kept many housing
markets resilient despite significantly higher borrowing costs.
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A truck driver looks out at the
construction site of a residential apartment building by Indian
property developer DLF Ltd. in Gurgaon January 27, 2010.
REUTERS/Adnan Abidi/File Photo
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"But at least for now, the proportion of housing markets that were
going to or at least were expected to move significantly in negative
territory just hasn't played out," he said. "And I think it's
unlikely that will be the case now."
Peak-to-trough falls for nearly all housing markets surveyed were
downgraded from the March poll.
However, with the high risk of recession in major economies this
year, a slim majority of analysts, 43 out of 81, who answered a
separate question said a significant downturn was more likely for
home prices than a notable rebound.
Home prices in Canada and New Zealand were forecast to drop around
9% and 8%, respectively, for the year, the most among developed
economies. In Germany, the expected drop was 5.5%.
British and U.S. house prices were expected to fall around 3% and
Australia's to be flat for the full year 2023. Average house prices
are expected to rise about 6% in India.
House prices are already rising in some markets, complicating
central banks' efforts to bring overall inflation under control as
rental costs can make up about a third of inflation baskets.
(Reporting by Hari Kishan; other reporting and polling by Prerana
Bhat, Jonathan Cable, Anant Chandak, Sarupya Ganguly, Indradip
Ghosh, Vivek Mishra, Milounee Purohit, Susobhan Sarkar, Devayani
Sathyan and Vijayalakshmi Srinivasan, editing by Ed Osmond)
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