Has The Worldwide Property Crash Begun ?

Property prices are tumbling in the US, Germany, Sweden, Denmark and the UK.

Higher interest rates and borrowing costs are hitting the property market across the globe.

The FT reports that there will be a global property meltdown this year, especially in overheated markets like Canada and New Zealand.

The property market in China is now at the slowest pace since records began in 1992 – down 26% last year.

Home prices in several US cities are crashing, following a recording boom from 2020-22, including Houston, Sacramento and Las Vegas. 

The cost of a 30-year fixed rate mortgage hit 7% recently, more than double the rate in 2022 and the highest since 2008.

Mortgage demand in the US is at its lowest for 25 years and house sales fell by a quarter last year.

Denmark has suffered the biggest fall in a decade, where house prices fell 3.8% in the third quarter of 2022 despite an interest rate of 1.75%, according to Yahoo Finance. In neighbouring Sweden, house prices have crashed by 20% in the last five months, says Yahoo.

Prices have fallen for the fifth consecutive month in the UK, where fixed mortgage rates reached 6% last year pushing affordability beyond the reach of average buyers.

Average property prices are close to ten times average incomes and much higher in parts of London and the south east of England.

Renters are also leaving London in droves to escape unaffordable rents and in search of cheaper properties to buy.

The Bank of England increased base lending rates by 0.5% last week to 3.5% in a bid to control the inflation their actions largely caused.

UK mortgage rates fall below 4%

Virgin and HSBC are offering fixed rates at 3.00% as lenders slash rates to stimulate demand. However, the headline rates required a 40% deposit and are usually for residential mortgages as opposed to buy-to-let loans.

Experts believe the property market will fall this year, but not at the same rate as in Sweden and Denmark. 

Despite demand for housing in the UK, prices in popular areas are unaffordable and will have to come down unless the market simply stagnates. Transactions are down by 30% and buyer enquiries are at the lowest level since 2008 (excluding 2020).

Like the overheated stock markets, property markets regularly go through a 10-12-year boom and bust cycle. The current boom has been fuelled by an unsustainable central bank money printing on an industrial scale since the 2008 financial crash.

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