- Home prices may decline by 12 per cent in Canada, 9 per cent in France and 3 per cent in the United States over the next two years, Goldman Sachs said
- Hong Kong home prices will fall by as much as 8 per cent, while transactions are likely to slump by 35 per cent for the whole year, said Cushman & Wakefield
- Farrah Gutierrez, a 45-year-old working mother of two, and her husband Angelo Gutierrez wanted to purchase a home in Vancouver, after moving from Winnipeg.
- The Philippine native and her family settled in Canadain 2018, but initially lived in Winnipeg for three years before deciding that Vancouver was a better fit for the family. Their timing, however, was not ideal.
- “In Winnipeg, we could buy a decent home for C$300,000 (US$227,406), but here in Vancouver a similar property would cost us C$1.7 million. With mortgage rates rising plus inflation, we need time to realise our dream of owning a home,” she said.
- Gutierrez is not alone. Across the world, monetary authorities are confronting rising consumer prices by raising interest rates, constricting consumers’ ability to make purchases, including those involving homes, to cool prices.
- While the effects have been uneven so far, that is unlikely to last as monetary policies continue to tighten. It is just a matter of time before more housing markets start to see declining prices, agents and analysts said.
- Lower transaction numbers do not bode well for home prices, as a 10 percentage-point slowdown in sales tends to be followed by a 2 percentage-point decline in home prices in around six months, according to a report released in June by Goldman Sachs.
- In the second half of the year, the investment bank said prime residential capital values across 30 cities it monitors in major markets are likely to grow 2.2 per cent, slower than the 2.4 per cent recorded in the first half. But a peak-to-trough decline of 12 per cent in Canada, 9 per cent in France and 3 per cent in the United States is likely over the next two years, it added.
- Indeed, prices in some countries have started to cool as central banks step up the pace of rate increases.
