In one of the most recent studies of the CaixaBank analysis service, "The real estate markets of the advanced economies in the face of the tightening of the monetary policy (part I and II)", they do an analysis of the real estate market market in the most developed nations after bank intervention. The study also estimates the potential adjustment of house prices in some countries, including Spain, beyond what they have already done since mid-2022. At HomeSearch Barcelona we summarize the most important points.
It is true that some global markets have shown clear signs of overvaluation, which began to be corrected more than six months ago. The CaixaBank Research report states: "According to the Dallas Fed Exuberance Indicator, 12 of the 25 countries analyzed showed signs of overvaluation in Q3 2021."
In this group, New Zealand, Canada, Australia and the United States stand out, while in Europe there are Holland, Luxembourg, Sweden, Denmark or Norway. Strong increases in house prices were also seen in Portugal, Germany and the UK.
The countries with the largest price drops in houses from their peaks are Canada (-10%), Australia (-9%), Sweden (-6%), the United States (-5%), Germany (-5%) . and New Zealand (-5%). Other nations, such as the United Kingdom or the Netherlands, have experienced more modest changes with drops of less than 5%. The bank's report states that as the real economy is affected by the tightening of monetary policy, the downward trend in house prices "should continue in the coming quarters". "The imbalances that have accumulated during the expansive phase of the real estate cycle will have a significant impact on the speed and intensity of this adjustment in the different markets." In the US, New Zealand, the Netherlands or the UK, house prices will experience a larger correction than they have already experienced. According to CaixaBank Research, "for Spain, a material price adjustment is not expected to be necessary." Given that the expected increase in household income would already make the affordability index converge, by the end of 2024, to the level of Q4 2019.
