According to a recent global Reuters poll of property analysts, home prices in several major markets are expected to continue their decline this year. The analysts either predicted slightly

steeper drops or maintained their previous outlook from a survey conducted three months ago. The forecasts were collected before the Federal Reserve indicated this week that interest rates would likely climb higher and stay elevated for longer than previously thought, suggesting that even greater drops may be in the offing.

Rising mortgage rates, as central banks lift benchmark borrowing costs to curb inflation, and a historic house price boom during the COVID-19 pandemic, have pushed home ownership closer to impossible for many prospective first-time buyers. This has in turn pushed up rents sharply in most markets, leaving the overall cost of housing much more expensive in just the past few years.

Predicted drops in house prices in the U.S., Canada, Britain, Germany, Australia, and New Zealand will come off price surges of as much as 50% since the start of the pandemic. Indeed, 50 of the 96 analysts in the polls, taken from Feb. 15 to March 8, said affordability would worsen in the coming year, with nine saying it would do so significantly.

Kate Everett-Allen, head of international global residential research at Knight Frank, commented, "Those markets that saw the strongest growth during the pandemic, so places like New Zealand, Canada, the Nordic markets, are probably likely to be most heavily affected."

The poll showed that house prices in Canada and New Zealand, which began to fall last year, were forecast to register a peak-to-trough drop of at least 20%. Both countries have considerably high household debt-to-income ratios. Double-digit falls from recent peaks were also predicted for Australia (16.0%), Germany (11.5%), and the U.S. (10.0%). British home prices were expected to fall 8.0%.

The most commonly cited reasons for house prices to remain elevated were crimped supply, made worse during the pandemic, when construction activity came to a near-halt, and ever-rising demand. Analysts at JLL noted, "A slowdown in new housing construction and (a) drop in building permits are expected to deepen housing shortages in many countries across the world, with population growth continuing to outpace growth in new housing supply. A divergence in construction output is anticipated in 2023, with most markets seeing a fall in supply."

However, the crisis-hit China property market, which has seen mounting debt defaults over the past year, was forecast to recover this year as stimulus policies and the scrapping of COVID-19 curbs improve sentiment. While India's housing market will remain resilient despite rising interest rates, home prices in Dubai were also predicted to rise steadily.