GLOBAL
- This week Australia reported a 1.1% m/m drop in home prices in January, NZ -0.3%, the UK -0.6% and the US -0.2% (November). Australia is now down 9.7% from its 2022 peak but the UK is down only 3.2%, even though both countries rose 24% over the pandemic period. The US rose by more over that time at 42.5% but is only down 2.5% from its 2022 peak (see chart).
- Corrections are likely to be deeper where there are high levels of household debt as a share of disposable income in a rising rate environment. Norway, the Netherlands, Australia and Sweden all have ratios above 200% (see chart) and all of them saw soaring house prices during the pandemic. Prices in the Netherlands rose 38.2% over this time but have so far only corrected 4.5%, as there is a lower share of variable rate mortgages and the ECB was one of the last to hike.
- It is worth noting that those countries with a high share of variable rate mortgages have seen some of the largest corrections to date, such as Australia, Sweden and Canada.
OECD home prices % change from peak
Source: MNI - Market News/Refinitiv/CoreLogic
OECD household indebtedness % disposable income 2021*
Source: MNI - Market News/OECD
* Data for NZ is 2020
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