Global Housing market Forecast: prices to Rise, but Where?
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The global housing market is poised for growth in the coming years, according to a new report from Fitch Ratings. While construction struggles to keep pace with demand in most regions,leading to price increases almost everywhere except China and France,the extent of that growth varies substantially by country.
Fitch’s housing and Mortgage Outlook projects a positive outlook. “Nominal house prices will experience low- to mid-single-digit growth in most countries in each of the next two years,” the report states. This upward trend is fueled by factors like low unemployment, rising real wages, and decreasing inflation, all contributing to increased consumer spending power.
Strongest Growth Predicted in Select Markets
The most notable price increases are anticipated in the Netherlands, Canada, Brazil, and Mexico in 2025. Goverment initiatives supporting first-time homebuyers in Canada and the Netherlands are expected to boost demand. Simultaneously occurring, in Brazil and Mexico, rising wages and construction costs will drive price appreciation.
conversely, China’s economic slowdown is projected to lead to a decline in housing prices.
European Real Estate: A Mixed Bag
Within Europe, the picture is more nuanced.While rising household incomes in the eurozone are generally pushing prices upward, France stands out as an exception.Financial instability and political uncertainty are expected to cause a price dip, even though the report suggests this decline will be less pronounced then in the previous year, with potential for price increases in 2026.
The Netherlands, despite experiencing a slowdown from 13% growth in 2024 to an estimated 8-10% in 2025 and 6-8% in 2026, still anticipates one of the world’s fastest-growing housing markets. This is largely attributed to a severe housing shortage, exacerbated by rising material and labor costs.
Germany and Spain are expected to see accelerated price growth, while Denmark’s market is predicted to remain relatively stable. In Spain,price increases of 4-6% in 2025 and a further 5-7% in 2026 are projected,driven by increased consumer confidence and insufficient new housing construction.
Germany’s housing market anticipates a more modest 2-4% growth in 2025 and 2026, a slight increase from Fitch’s 2024 projections. This growth is attributed to a combination of factors, including moderate wage growth and rising rental costs, which make homeownership a more attractive option.
The UK also anticipates modest growth of 2-4% in 2025 and 2026, fueled by decreasing mortgage interest rates and the expectation that policy rates will reach 3.5% in 2025.
These global trends have implications for the U.S. market, highlighting the interconnectedness of international economies and the influence of global factors on domestic housing prices. While the U.S. is not directly addressed in this report, the global trends of supply chain issues, inflation, and interest rate fluctuations are all relevant factors impacting the American housing market.
The US housing market, a cornerstone of the American economy, faces a complex future. while recent trends have shown some signs of stabilization, several factors could significantly impact home prices and affordability in the coming years.Experts are closely watching interest rates, inflation, and the overall economic climate for clues about what lies ahead.
According to a recent report, mortgage rates are expected to see a gradual decline over the next two years. “We expect mortgage rates to decline to 2.5% over the next two years, but remain substantially higher than pre-2022 levels,” the report stated. This projected decrease, however, doesn’t fully offset the challenges facing potential homebuyers.
Supply and Demand: A Persistent Imbalance
A persistent shortage of housing inventory continues to be a major factor influencing prices. High land, labor, and material costs, coupled with stringent regulations and higher borrowing rates for smaller builders, are limiting new construction.This constrained supply,combined with relatively strong demand fueled by factors like low unemployment and income growth,creates an surroundings ripe for price fluctuations.
The report notes that demand is also supported by “falling rates, low and stable unemployment, growth in household disposable income and the formation of new households.” However, this positive outlook is tempered by potential headwinds.
Rising Costs and Economic Uncertainty
Beyond interest rates, several other factors could impact affordability. The report highlights the increasing burden of insurance, maintenance, and property taxes. “Rising insurance costs, maintenance costs and, in certain specific cases, property taxes, could also drive many potential buyers out of the housing market,” the report warned. These escalating costs could significantly reduce purchasing power, even with perhaps lower mortgage rates.
Moreover, the broader economic climate plays a crucial role. A stronger-than-expected economy could lead to faster-than-anticipated price growth.Conversely, a downturn could result in higher unemployment and reduced income, dampening demand.The Federal Reserve’s actions on interest rates will also be a key determinant, with potential reversals of easing policies limiting borrowing capacity.
Climate Change and the Future of Housing
The long-term outlook also includes considerations of climate change.The report points out that climate risks,such as increased flooding,could impact property values. Additionally, the growing emphasis on lasting building practices, while beneficial for the environment, will likely add to construction costs.
Despite these challenges,energy-efficient homes are expected to see increased demand due to high energy costs,although prices for these properties may also be affected by the overall market conditions.
The US housing market’s future remains uncertain, a complex interplay of economic forces and long-term trends. Careful monitoring of interest rates, inflation, and the broader economic landscape is crucial for both buyers and sellers navigating this dynamic environment.
Global Housing Market Forecast: Prices Poised to Rise, But Where?
The global housing market is on an upward trajectory, with prices expected to climb in most regions over the next two years.However, this growth will not be uniform across the globe, with specific countries experiencing more significant increases than others.
World Today News sat down with Dr. Amelia Roberts, a leading economist specializing in global real estate trends, to discuss the key takeaways from Fitch Rating’s latest housing market forecast.
World Today news: Dr. Roberts,the Fitch report paints a generally optimistic picture for the global housing market. What are the main drivers behind this anticipated growth?
dr. Roberts: You’re right, Fitch projects positive growth for most countries. This is largely driven by strong economic fundamentals. We’re seeing low unemployment rates in many regions, coupled with rising real wages. This increases consumer spending power, allowing more people to enter the housing market.
World Today news: The report highlights significant variations in price growth projections. Where do you see the strongest growth happening?
Dr. Roberts: The Netherlands,Canada,Brazil,and Mexico are projected to see the most considerable price increases in 2025.In Canada and the Netherlands, government initiatives aimed at supporting first-time homebuyers are expected to fuel demand. Concurrently, rising wages and construction costs in Brazil and Mexico will likely push prices upwards.
World Today News: Conversely, the report predicts a decline in China. What factors are contributing to this downturn?
Dr. roberts: China’s economic slowdown is the primary driver. We’re seeing reduced consumer confidence and a cooling property market.
World today News: Europe presents a mixed bag. Could you elaborate on the trends within the eurozone?
Dr.Roberts: While rising household incomes across the eurozone are generally positive for the housing market,France stands out as an exception. Political and financial instability are expected to lead to price dips.
World Today News: The Netherlands is experiencing impressive growth despite a projected slowdown. What’s driving this?
Dr. Roberts: The Netherlands faces a severe housing shortage, exacerbated by rising material and labor costs. This strong imbalance between supply and demand is fueling continued price growth, even if it’s at a slower pace than in previous years.
World Today News: What about other European countries like Spain and Germany?
Dr. Roberts: Spain is projected to experience significant growth fueled by increased consumer confidence and a lack of new housing development.Germany’s growth is expected to be more modest, with moderate wage growth and rising rental costs making homeownership more appealing.
World Today News: These global trends have implications for the US market as well, given our interconnected global economy. What are yoru thoughts on how these international factors might influence the American housing landscape?
Dr. Roberts: Absolutely, the US market is not immune to these global dynamics. Supply chain issues, inflation, and interest rate fluctuations are impacting housing markets worldwide, including the US. While the Fitch report doesn’t directly address the US, keeping an eye on these global trends can provide valuable insights into potential developments in the American housing market.
world Today News: Dr. Roberts, thank you for sharing your expertise and providing clarity on these complex global housing market dynamics.
