London, Paris, San Francisco… Falling real estate prices

Under the effect of inflation and in the face of economic uncertainties, the value of the global real estate market has fallen, reports “Le Figaro”.

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Inflation and economic uncertainty are driving down global property prices. (Illustrative photo).
© RICCARDO MILANI / Hans Lucas / Hans Lucas via AFP

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Lhe boom in real estate prices has come to an end. Under the effect of the slowdown in the economy, mortgages have become more expensive, the demand for housing has fallen, which has caused a decrease in real estate prices after several years of growth, relays le figaro. In an October Financial Stability Report, the IMF referred to a “tipping point” for the global real estate sector. The most pessimistic scenario would see a 25% drop in prices in emerging markets and more than 10% in advanced countries.

A situation that many countries are already experiencing. For example, in China, real estate sales have fallen 43% this year. Prices drop in Sweden, Germany, Canada, New Zealand or Australia. They are falling in half of the top 18 markets, according to Oxford Economics. The same development in the United Kingdom, where demand fell by 44% and sales by 28%. Prices have been falling for three months and the government expects them to fall by 9% next year.

An uneven fall at the national level

“Overall, these are the most worrying forecasts for the housing market since 2007-2008. Some countries can expect a moderate decline and others face much steeper declines, in the 15-20% range,” said Adam Salter of Oxford Economics. This price drop varies nationally. “Cities are seeing significant price drops from their 2021 peak, while others continue to see double-digit increases,” said Kate Everett-Allen, Knight Frank’s director of residential research.

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Housing demand will also be affected by weak consumer confidence, as the Russian-Ukrainian conflict continues to fuel economic uncertainty. A sharp fall in prices of more than 15% would likely put banks in trouble, especially in France, Italy, Spain and the Netherlands. A significant drop in prices would also have consequences for UK social housing, which is funded by groups that make most of their income from selling properties on the market. But this fall in prices will not allow more households to access the property, seeing their purchasing power reduced by inflation.

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