As borrowing costs rise, house prices fall

Heavy increases in house prices seem to be over. Data from many developed countries seem to indicate that house prices are now decreasing. The International Monetary Fund did publish a chart showing such a trend.

Soaring interest rates combined with one of the sharpest cost-of-living squeezes in living memory have dampened demand in the market. Mortgage rates are now near where they were in 2008. Industry professionals believe the mismatch between supply and demand will continue to keep pressure on prices with the annual rate of inflation likely to stay positive while others insist higher borrowing costs will eventually lead to a contraction in prices like those seen in other countries.

Many analysts believe the industry is underestimating the impact of these higher interest rates and that we will soon see a price correction of some sort.

The European Central Bank (ECB) has raised interest rates five times since last July in a bid to tame inflation. 

In Malta, some are predicting trouble for the property sector. Such an opinion was expressed by KPMG. The argument of falling house prices is being debated in the United Kingdom. Some mortgage lenders say that prices are decreasing and other arguing that this is not the case.

Read further about this at Melvyn Mangion‘s page.

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