Despite high interest rates, the prospect of global housing markets has slightly improved from three months ago, according to Reuters polls of property analysts. It is believed that analysts were mostly split on whether affordability would worsen or not.
The Reuters polls of 100 analysts from May 15 to June 5 showed house prices in the US, Canada, Germany, Australia, and New Zealand either stagnating or falling less than what was predicted three months ago. The outlook was little changed for Britain and India, as the prices have kept rising.
Housing prices saw an acute rise across the developed world during the Covid-19 pandemic, even more than 50 per cent in some cases. However, the prices saw a modest fall over the past year as central banks jacked up interest rates.
The polls show that higher lending rates have made only a little impact on the normally interest-rate-sensitive housing market. The post-pandemic surge in immigration and low unemployment have kept demand strong amid ongoing tight supply.
"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 in polls.
"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," the analyst added.
An additional question on purchasing affordability for first-time buyers was asked from the analysts across markets covered and they were nearly split, with 45 saying it would worsen and 43 saying it would improve.
"Strong wage gains over the past year have kept many housing markets resilient despite significantly higher borrowing costs," said Adam Challis, Executive Director of research and strategy, EMEA, JLL.
"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, and I think it's unlikely that will be the case now," he added.
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Peak-to-trough falls for nearly all housing markets surveyed were downgraded from the March poll, said Reuters.
With the high risk of recession in major economies, 43 out of 81 analysts, who answered a separate question, said a significant downturn was more likely for home prices than a notable rebound.
House prices in Canada and New Zealand were estimated to drop nearly 9 per cent and 8 per cent, respectively, for the year, which is the most among developed economies. The expected drop in Germany was 5.5 per cent.
British and US house prices were expected to drop around 3 per cent and Australia's to be flat for the year 2023. Whereas, in India, the average house prices are expected to rise about 6 per cent.