Affordability at risk as global property prices keep rising
Bengaluru
THE relentless rise in house prices will ease, but not stop, in most major property markets next year, an outlook which experts polled by Reuters said would only aggravate affordability as interest rates also move higher.
Nearly three-quarters of respondents surveyed over the past few weeks, 74 of 103 covering eight major world markets, said they expected housing to be even more expensive, and less affordable for many, over the coming two to three years.
People who were already struggling to put together a downpayment will be less able to secure their first home as existing homeowners with piles of cash saved during the pandemic easily outbid them.
"The biggest risk is really to the younger generations coming through who won't be able to amass the deposits required.
Years of record-low interest rates and a chronic shortage of affordable homes had already propelled house prices in most major property markets to eye-watering levels before the pandemic.
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That rise in prices was exacerbated when swathes of people in the workforce who were well off, owned homes and were able to work remotely during pandemic-related lockdowns began looking for more space, often outside cities.
Most major housing markets have outperformed not only their respective broader economies but also property market analysts' own optimistic expectations.
In five of those markets - the United States, Britain, Australia, Canada, and Dubai - house prices have roughly risen at twice the rate analysts had predicted at the beginning of this year.
Even with that outperformance, only 1 analyst out of 111 who provided house price forecasts across eight markets expected them to fall next year.
One challenge likely to linger through next year is a shortage of building materials that the pandemic has brought by clogging up global trade. That will not do anything to accelerate the already-slow pace of construction of affordable homes. REUTERS
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