Capitol Economics has warned the world that home prices in many nations are on the verge of a decline, according to a report on July 11th.
Capital Economics chief economist Neil Shearing recently released a research report saying that in the next 18 months, house prices in Canada and New Zealand will plummet by 20%, Australia by 15%, Sweden by 10% to 15%, the U.K. by 5% to 10%, and the U.S. by 5%. In response, Shearing said the gross domestic product (GDP) of the six nations will also drop by 0.5% to 2% over the next few years due to the downturns of home prices.
The report pointed out that the global central banks maintained low interest rates for many years to promote the soaring prices, plus cheap mortgages inflated a huge bubble in house price. But now, central banks are actively raising interest rates and mortgages cost in order to suppress inflation, and the housing bubble could burst at any time. Since the US housing market is already in decline, the mortgage application rate has fallen 28% from their peak and new home sales are down 17%.
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