House prices across most major markets are expected to rise modestly in 2024 and 2025, as lower mortgage rates are anticipated to improve affordability slightly. A recent survey of analysts covering housing markets in the U.S., UK, Germany, Canada, Australia, New Zealand, China, Dubai, and India indicates that while price increases will vary, most markets will experience gains.
The optimistic outlook stems from expectations that central banks, including the U.S. Federal Reserve, will begin cutting interest rates this year, with the Fed anticipated to act at its September meeting. Falling rates could provide a minor boost to housing demand in markets already constrained by limited supply. However, the forecast price rises are not expected to be as significant as previous periods of monetary easing, given ongoing affordability challenges.
According to the survey, home prices in different markets are expected to rise between 1.4% and 8% in 2024, with five of the nine markets covered showing upgrades in their outlook compared to three months ago. Analysts expect affordability for first-time homebuyers to improve, though only modestly, with 80% of respondents predicting a slight easing in affordability pressures. Nevertheless, tight supply will continue to pose a challenge, particularly in markets like the U.S., Canada, and the UK.
Renters are also expected to feel the squeeze, with urban rents forecast to outpace inflation over the next 12 months across all surveyed markets. This trend is driven by limited housing stock and a growing pool of potential buyers who are unable to enter the property market.
In the U.S., home prices are projected to rise by 5.4% in 2024 and continue climbing through 2026. Homeowners with low, long-term mortgage rates locked in at under 5% are unlikely to sell, further constraining supply and contributing to higher prices. Similarly, in Australia, home prices are expected to rise over 6% this year, pushing them above pre-pandemic peaks due to tight supply.
Meanwhile, India’s housing market is forecast to see the highest price growth, with luxury property demand driving an 8% increase in 2024, followed by 6% in 2025. Conversely, Germany’s housing market, which saw prices drop sharply in 2023, is expected to stabilize with a small decline of 1.4% this year and a modest recovery of 2% in 2025.
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