The View | Recovery? Crisis? Where you stand on the state of housing markets depends on where you sit
- Housing prices are rising in several countries, even those with high levels of household debt and large proportions of floating rate mortgages
- However, the persistence of acute vulnerabilities means global property markets will continue to emit mixed signals and perception depends on one’s stake
Evidence that housing markets are more resilient to the dramatic rise in interest rates than anticipated has become stronger. As Goldman Sachs noted in a report published in May, property markets are showing “signs of stabilising, with prices levelling out more quickly and at a higher level than would normally be expected given the rapid rise in mortgage rates”.
Not only are prices stabilising, they are rising again in several countries, even in ones deemed vulnerable because of their high levels of household debt and high proportions of floating rate mortgages.
In Australia – where variable rate mortgages account for about 70 per cent of outstanding loans – home values have increased for five straight months, reducing the fall in prices since the April 2022 peak to just 5 per cent, according to data from CoreLogic.
In Canada, another market with a high share of variable rate mortgages, prices began rising in April in the face of further rate increases by the Bank of Canada, which last month singled out the resilience of the housing market as a source of persistent inflationary pressure.
Even in New Zealand and South Korea, where prices have fallen much more sharply than in other markets, home values have bottomed out. In parts of Auckland and the greater Wellington area, as well as in Seoul, they are starting to rise.