are rising rapidly, bringing to a close the era of easy money that’s defined the years since the 2008 global financial crisis. There are also implications for household wealth and economic growth at a time when recession risks already hang over many countries.Article content
housing market tumbled into a deep freeze for years. Sales plummeted, and prices didn’t hit bottom until 1996 after losing more than a quarter of their value.Article content But prices are still significantly higher than they were before the pandemic, so there could be more declines to come.Images of unfinished housing blocks symbolize the bleak state of Chinese real estate, where buyers are paying for homes that they can’t occupy. That led to a mortgage boycott this year, with homebuyers threatening to halt making payments.
China has pursued similar policies to contain its boom over the last three years. Financing has been squeezed and the government asked banks to slow the pace of mortgage lending. That triggered a wave of defaults and left millions of square feet of unfinished buildings. While many economists say the crippling housing downturn won’t get much worse and that the stimulus will kick in this year or next, few are calling for a sharp rebound. But the policy moves, along with a gradual easing of COVID restrictions, may help the market find a floor.Australia saw a big run up in the home prices during the pandemic, but the central bank has jacked up its benchmark interest rate by 250 basis points in a matter of months, and the market has gone into reverse.
One concern in Australia, and echoed in other economies too, is stretched household finances. The debt-to-income ratio is at 187 per cent, compared with about 70 per cent during the 1990s.