Global housing market - statistics & facts
The global housing market landscape has undergone dramatic challenges in recent years, including declining transactions, slowing price growth, and worsening affordability. In most OECD countries, the gap between household incomes and property values has widened notably over the last decade, while soaring mortgage rates have curbed mortgage borrowing. Established housing markets such as Hong Kong, Germany, France, and the United Kingdom saw house prices decline in the first quarter of 2024. On the other hand, Turkey, Russia, and the United Arab Emirates recorded double-digit growth.
Affordability challenges extend beyond the United States. In the second half of 2022, advanced economies saw nominal house prices decline for the first time following a nearly 12-year period of uninterrupted growth. Although the downward trend quickly reversed for nominal prices, real property prices plateaued in 2023. That reveals a stagnation in the market as homebuyers grapple with rising living costs and stricter lending.
Moving ahead, real estate investors and developers in 2024 expressed an improving market sentiment regarding homebuilding over the next year. That is a good sign for overheated markets with strong supply-demand imbalances.
The global housing market slows amid economic pressures
The market has experienced significant volatility in recent years, transitioning from rapid growth to a slowdown. Home sales in the United States have plummeted since 2021, with 2023 falling below the levels recorded during the subprime mortgage crisis (2007 to 2010). This trend is underpinned by declining housing affordability amid slow median household income growth, soaring mortgage interest rates, and consistently rising home prices.Affordability challenges extend beyond the United States. In the second half of 2022, advanced economies saw nominal house prices decline for the first time following a nearly 12-year period of uninterrupted growth. Although the downward trend quickly reversed for nominal prices, real property prices plateaued in 2023. That reveals a stagnation in the market as homebuyers grapple with rising living costs and stricter lending.
The importance of mortgage interest rates
Following the inflation surge of 2021-2022, mortgage interest rates experienced a significant shift, rising from all-time lows to 10-year highs. In major European markets such as the UK and Germany, interest rates continued to increase well until the fourth quarter of 2023 before showing signs of easing in early 2024. Tighter lending conditions and higher borrowing costs directly impact homebuying, as they make qualifying for a mortgage more difficult. In the UK, the number of mortgage approvals for a house purchase fell below 40,000 in January 2023, down from a peak of 108,000 in November 2020. Mortgage approvals have since picked up, marking a brighter market outlook.Moving ahead, real estate investors and developers in 2024 expressed an improving market sentiment regarding homebuilding over the next year. That is a good sign for overheated markets with strong supply-demand imbalances.
