Deepak Malhotra, Investor & Landlord, Cheney WA,  99004

It Isn’t Just the Western US–Property Values are Declining Around the World


According to a report by Global Property Guide, after experiencing significant growth for several years, there is a noticeable decline in global housing markets.

This is not unexpected, given the combined negative impacts of reduced purchasing power caused by high inflation, increased borrowing costs due to rising interest rates, a global economic slowdown, and sanctions on Russia, a major exporter of oil. Higher oil prices for Europe mean higher costs of production for manufacturing companies and more pain for ordinary people who heat their homes and drive cars.

When accounting for inflation, house prices have only risen in 19 countries and decreased in 42 countries that have reported housing statistics for Q1 2023. The United States, in particular, has seen a decline in house prices following a decade of strong growth. The Federal Reserve on June 14, 2023 signaled that two more interest rate hikes are coming, which will put more pressure on real estate values in the U.S. At the same time, foreclosures, which were halted by law during the pandemic, are now continuing and some are starting to hit the market. Foreclosed properties will also put downward pressure on property values as banks just want to get these properties off their books and will sell, versus ordinary homeowners who have emotional “minimum” values that they need to receive before they will sell, and who may not be highly motivated to sell if they have a low interest rate mortgage.

High inflation in most countries creates an impression that house prices continue to rise strongly (or the decline is just modest). For example, in Egypt, house prices surged by 22.28%, however if we adjust for inflation, real prices have actually declined by 7.85%. Inflation rates are actually much higher than official figures published by governments. Professor Steve Hanke published shadow statistics purporting to show actual inflation rates by country. It is quite interesting. Inflation in Ethiopia has risen to 64%/yr. – nearly 2 times the government reported rate. Venezuela’s inflation rate is at 451%. Zimbabwe, the perpetual basket case, has the highest inflation rate in the world.

https://public.tableau.com/app/profile/prof.steve.h.hanke/viz/HankesInflationSatellite/HankesInflationSatellite

https://www.globalpropertyguide.com/property-investment-research