forma condo toronto.Is global real estate at a “tipping point”? The global real estate industry looks bright. Among the 38 members of the OECD, house prices are rising at their fastest pace in 50 years.Please Visit: forma condo toronto to Get Your VVIP Registration Today!
But in less than a year, the situation was completely different. The Oxford Institute for Economics predicts that almost all countries in its database will experience an economic slowdown next year, the most common deceleration in house price growth since 2000, and more than half of the countries are likely to see a complete contraction in prices. a similar situation happened in 2009.
“this is the most worrying real estate outlook since 2007 and 2008, and the market hovers between a moderate decline and a sharp decline.” Adam Slate, chief economist of the Oxford Institute of Economics, believes that in his view, “the continued surge in mortgage rates in developed economies is likely to push some real estate markets into a sharp decline.”
“as central banks around the world actively tighten monetary policy in response to price pressures, soaring borrowing costs and tighter lending standards, coupled with high home valuations, could lead to a sharp fall in house prices.” According to the global financial stability report released by the International Monetary Organization (IMF).
This “sharp decline” is likely to be widespread. While the Oxford Institute of Economics data analysis is mainly in developed economies, the IMF predicts that real house prices in emerging markets could fall by 25 per cent over the next three years in severe adverse circumstances, compared with 10 per cent in advanced economies.
A slowdown in the property market could also dampen broader economic activity, hurting the construction industry and its suppliers. Slate predicts that the downturn in the global real estate market could reduce economic growth by 0.2 percentage points due to reduced spending, while a decline in residential investment could reduce economic growth by 0.6 percentage points. The Bank of Canada estimates that the downturn in the property market will reduce economic growth next year by 0.6 to 0.9 percentage points.
After a series of rapid interest rate hikes by the Fed, interest rates for 30-year trading in the US have held steady at around 7 per cent, more than double last year and the highest level since 2008.
Coupled with the surge in house prices in the past two years, monthly mortgage repayments on typical assets have risen to more than $2600 from $1700 a year ago. “I think interest rates may bring more resistance, and we do see a slowdown in the housing market,” said Nathan Sheets, chief economist at Citibank.
The model is similar in many countries, with mortgage rates in the eurozone, Canada, Australia and New Zealand rising to their highest levels in recent years.
“as mortgage rates rise and banks stop lending and dampen demand, we still believe that the rise in house prices in the eurozone will fall sharply and turn negative by the end of 2023,” said Melanie Debono, an economist at Pantheon Macroeconomics, a macroeconomic consultancy.
Marcel Thieliant, an economist at Capital Economics, the UK economic consultancy, estimates that mortgage repayments in New Zealand have soared to more than 60 per cent of median income, up from less than 45 per cent before COVID-19 ‘s outbreak. As interest rates rise further, he predicts that house prices in new Zealand will fall by 25% from their November peak.