December 13, 2023 (MLN): Home prices will continue to grow in 2024 in most countries profiled in the latest Global Housing and Mortgage Outlook, albeit at a slower pace than in 2023, Fitch Ratings says in its Global Housing and Mortgage Outlook for 2024.
Mexico, Colombia, Brazil, Australia, Canada, and the Netherlands are likely to see the strongest growth, while prices will be mostly flat in the UK and fall in China, France, and Japan.
Limited supply will support prices. Sales are declining with insufficient new construction and as homeowners with low fixed-rate mortgages choose to delay moves.
High rents in some areas will limit prospective homebuyers’ ability to save for a downpayment.
Mortgage rates will stay high in 2024 and 2025, which will weigh on demand and discourage sales, especially where many homeowners still benefit from much lower fixed rates, and borrowers may also struggle to meet lenders’ underwriting criteria for new mortgages.
Demand may strengthen in a few countries as inflation subsides, particularly in areas with lower home price/income ratios.
Despite mortgage rates remaining high, arrears will only marginally increase or remain stable in 2024, with some possible declines in 2025.
This is largely due to resilient labor markets, savings buffers, and incentives to stay with low-rate mortgages in long-term, fixed-rate markets.
Sizeable borrower equity due to home price appreciation and lenders’ willingness to offer modifications or forbearance will keep defaults low in all countries.
Climate risk is becoming more tangible every year. In some cases, the effects on the housing market are temporary, but changing government incentives and rising insurance costs in some countries may affect home values over time.
