- Growth slowdown impeding housing market,…
- …but central banks acting as counterweight with rate cuts
The worst tensions in the housing market lie behind us. In 2016 optimism reached a record level. In 2017 the number of transactions peaked. In 2018 prices increased at their fastest rate. After a period of decline, the number of properties for sale has stabilised since the start of this year. Properties are also taking a little longer to sell. The housing market remains tight, but is cautiously entering calmer waters.
We assume that the transaction rate and price increases will gradually return to a normal level. But the economy is a risk. Growth is faltering now that world trade is weakening amidst escalating international tensions. Exports are under pressure and the mounting unrest has made households and businesses less positive about the future. The economic growth deceleration is taking its toll on the housing market.
Fortunately, the central banks are standing by to cut their key policy rates and buy up more bonds if necessary. Mortgage rates will therefore stay low for longer (and possibly even fall slightly), giving the housing market some welcome support. Against this backdrop, we have left our housing market forecasts largely unchanged. Only our price forecast for next year has been slightly reduced from 4% to 3%. However, if the international unrest increases and the economy weakens further, these central bank measures will not be enough and we will need to make further downward revisions.