The world’s major economies will continue to face rising house prices and diminished affordable homeownership opportunities in the near future, according to a Reuters poll of roughly 100 property analysts in the U.S., Canada, the U.K., Germany, India, Australia and New Zealand.
The majority of the surveyed analysts said the acute lack of starter homes was not likely to be addressed soon, resulting in a shortfall in affordable homes. When asked if governments should be more active in growing the supply of affordable homes, roughly three-quarters of the analysts said yes. The U.S. was the only market where most of the polled analysts said governments should not become more involved in expanding homeownership affordability.
The analysts also insisted that cutting down interest rates will further fuel affordable home availability.
“I think everything comes down to rate cuts,” said Liam Bailey, global head of research at Knight Frank. “If we don’t get rate cuts this calendar year then prices will be under pressure next year because there’s only so far prices can be pushed by buyers and we’re getting close to the limits of affordability again.”
“Your best bet for a trigger that might help affordability over the next year is interest rates,” added John LaForge, head of real asset strategy at Wells Fargo Investment Institute. “But frankly, it doesn’t look like we’re getting those four to five or six rate cuts from the Fed most economists thought earlier.”
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