A cross the world house prices are breaking records – but this time it is because of how fast they are falling. Houses in Stockholm are now selling for 20% less than their peak, Sydney prices are down by almost 14% over the year, while in San Francisco they are down by 15%, in Auckland by almost 22% and in Toronto by 16%.
Germany has registered its biggest six-month price fall for two decades, while in France forecasters are expecting declines of 5% to 7% this year, and after a strong year in Spain, the first price declines are being reported in Mallorca and Ibiza.
Meanwhile, maybe spare a thought for some homeowners in the South Korean capital of Seoul, where apartment prices are reportedly down by 24% since October 2021.
The UK’s house price falls to date – down by 4.2% or 3.2% since their peak in August last year, according to the Halifax and Nationwide respectively – look relatively mild in comparison with some of those locations.
So what is behind the global mini crash, and are there lessons we can learn from what is happening in other countries?
At its simplest, it’s about the cost of money. The long era of near-zero interest rates, which made borrowing to buy a home cheaper than at almost any time in history, is over, for now at least.
The Bank of England has raised rates from 0.1% in late 2021 to 4% today – with a corresponding rise in mortgage rates. Meanwhile, US average long-term mortgage rates are now above 6%. A year ago they were below 4%.
In the UK millions of borrowers are on fixed-rate deals that are still protecting them from sharp increases in their monthly mortgage costs. That’s very different to a country such as Sweden, where most households have variable-rate mortgages that go up in line with changes in
Read more on theguardian.com