Global Housing Market Poised for Growth, fitch Predicts
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The global housing market is expected to see a period of steady growth over the next two years, according to a new report from Fitch Ratings. Their outlook for 2025 and beyond paints a picture of modest price increases in most major markets,driven by a combination of strong demand and constrained supply.
“Nominal home prices will grow in the low to mid-single digits for most countries in each of the next two years,” the report states, highlighting a trend of increasing demand outpacing the available housing supply in numerous countries.
This increased demand is fueled by several key factors: low unemployment rates, real wage growth, and lower inflation, all contributing to higher disposable income for potential homebuyers. This trend is particularly noticeable in countries like the Netherlands, Canada, brazil, and Mexico, where the most critically important price increases are anticipated.
Strong Growth Predicted in Select Markets
Canada and the Netherlands are projected to experiance robust growth, partly due to government initiatives supporting first-time homebuyers. In Brazil and Mexico, the combination of rising wages and construction costs is expected to drive price increases. The report anticipates particularly strong growth in the Netherlands, with prices expected to slow from 13% in 2024 to between 8% and 10% in 2025, and 6% to 8% in 2026.
Though, not all markets are expected to follow this trend. France, for example, is projected to see a decline in prices due to affordability concerns and political uncertainty. “The pace of decline is expected to be slower than last year and prices will perhaps start increasing in 2026,” the report notes.
European Market Outlook
Across Europe, Germany and Spain are expected to see accelerating price growth, while Denmark anticipates stable increases. In Spain, prices are projected to rise between 4% and 6% in 2025 and an additional 5% to 7% in 2026, fueled by growing consumer confidence and limited new construction. Germany anticipates a more moderate increase of 2% to 4% for both 2025 and 2026, a rise from the estimated 1.5% in 2024.
The UK also anticipates modest growth of 2% to 4% in 2025 and 2026, driven by lower mortgage interest rates and a strong labor market.Denmark expects similar growth, with projected increases of 2% to 4% due to lower interest rates and moderate income growth. Italy, however, is expected to see a more subdued increase of 0.5% to 2.5%, primarily due to high mortgage rates.
“We expect mortgage rates to decrease to 2.5% in the next two years, but to remain substantially higher than pre-2022 levels,” Fitch’s report states, explaining the slower growth in the Italian market.Limited building permits further constrain supply, resulting in slower price appreciation compared to markets with more new construction.
the report highlights a global trend of low supply relative to demand, driven by high land, labor, and material costs, along with elevated borrowing rates for smaller builders and regulatory constraints. Though, declining interest rates, low unemployment, and rising disposable incomes are expected to continue supporting demand in many key markets.
Global Housing Market Set for Steady Growth in coming Years, Says Fitch
The global housing market is expected to experience modest but sustained growth over the next two years, according to a recent report from prominent credit rating agency Fitch Ratings. experts point to a strong combination of factors driving this trend, including a rise in disposable income for potential homebuyers and a continuing global shortage of housing supply.
A Period of Steady, Moderate Growth
Senior Editor: Joining us today is Dr. Emily Carter, a renowned housing market analyst with over 15 years of experience in international real estate trends. Dr. Carter, Fitch’s recent report paints a picture of sustained growth for the global housing market. What are the key factors driving this positive outlook?
Dr.Emily Carter: Thank you for having me. Yes, Fitch’s analysis suggests a period of steady, albeit moderate, growth in most major housing markets over the next couple of years. This is driven by several key factors. Firstly, we’re seeing strong demand fueled by improving economic conditions in many countries.
Low unemployment rates, rising real wages, and lower inflation have contributed to higher disposable income for many people, making homeownership a more attainable goal.
Secondly, there’s a global supply constraint in the housing market. Construction costs remain elevated due to factors like rising material prices and labor shortages. Regulatory constraints and limited building permits in some areas further restrict new construction, adding to the supply crunch.
Regional Variations and market Dynamics
Senior Editor: The report highlights some interesting regional variations. Can you elaborate on these, especially for markets predicted to experience significant growth?
Dr. Emily Carter: Absolutely. markets like Canada and the Netherlands are expected to see particularly robust growth, partly driven by government initiatives aimed at supporting first-time homebuyers. in Brazil and Mexico, a combination of rising wages and increasing construction costs is fueling projected price increases.
The netherlands stands out with a projected price growth rate slowing from a significant 13% in 2024 to a still-healthy range of 8% to 10% in 2025, and 6% to 8% in 2026.
Senior Editor: What about European markets? Fitch mentions varied growth rates across the continent.
Dr. Emily Carter: That’s right. While Germany and Spain are predicted to see accelerating price growth, driven by factors such as growing consumer confidence and a shortage of new construction in Spain’s case, Denmark is projected to experience stable, moderate increases, similar to the UK, fueled by lower interest rates and a strong labor market.
Interestingly, Italy is expected to see a slower pace of growth due to relatively high mortgage rates compared to other European nations. Limited building permits are further constraining supply, leading to a more subdued price increase compared to markets experiencing a faster rate of new construction.
Senior Editor: It seems like the global housing market is a complex landscape with varied dynamics at play. what are some potential risks or challenges that could impact this positive outlook?
Potential Risks and Looking Ahead
Dr. Emily Carter: Certainly, there are some potential risks on the horizon. One key concern is the possibility of further increases in interest rates.
While Fitch anticipates a gradual decline in mortgage rates over the next couple of years, a sharper than expected rise could dampen demand and slow down price growth.
Geopolitical instability and economic uncertainty can also have a significant impact on housing markets.
Senior Editor: dr.Carter, thank you so much for providing these valuable insights into the dynamics shaping the global housing market. Your expertise has shed light on the factors driving this period of growth and the potential challenges that lie ahead.
Dr. Emily Carter: you’re welcome. It’s been a pleasure to be here.
