While real estate prices decline in the U.S., they are also beginning to decline in the U.K. Many countries around the world are suffering from high inflation. The Federal Reserve has increased interest rates quicker than other countries, so the real estate correction has started in the U.S. and the dollar has gone up relative to other currencies. Money flows to where it is treated best and higher interest rates attract money from countries with lower interest rates.
As other countries increase their interest rates, their real estate markets will correct too. The U.K. property market is facing a collapse in prices of up to 30%. New homebuyer inquires in the U.K. fell in October to their lowest level since the 2008 financial crises. This is an indication that demand is falling.
The MSCI UK Quarterly Property Index, which includes retail, office, industrial and residential property, fell 4.3% in three months, the worst performance since 2009.
As the Bank of England raises interest rates to fight inflation, the downturn in U.K. real estate values could be more dramatic than experts initially thought.
Oxford Economics analysts suggest that real estate values are poised to fall in 9 of 18 advanced economies, with commonwealth countries Canada, Australia, and New Zealand included in the list of countries most at risk of declines of up to 15%-20%. Canada has had uncharacteristically high price to rent ratios and affordability ratios for some time now, setting the stage for a larger decline than what might be expected in the U.S.
Contact Deepak Malhotra if you need help with real estate investing. Even if you are not looking in Cheney, Medical Lake, Airway Heights, or the Spokane area, mentoring services or referrals can be provided.