Economy

Global housing outlook brightens despite pressure from higher rates

Published

2 years ago

June 6, 2023

The outlook for most major housing markets has improved slightly from three months ago despite high interest rates, according to Reuters polls of property analysts who were mostly split on whether affordability would worsen or not.

House prices rose at a blistering pace across the developed world during the COVID pandemic — in some cases by more than 50% — but have fallen over the past year by modest amounts as central banks jacked up interest rates.

Higher borrowing costs have made only a small dent on the normally interest-rate-sensitive housing market, however, as still-low unemployment and a post-pandemic surge in immigration have kept demand strong amid ongoing tight supply.

The Reuters polls of around 100 analysts taken May 15-June 5 showed house prices in the U.S., Canada, Germany, Australia and New Zealand either stagnating or falling less than analysts had predicted three months ago. The outlook was little changed for Britain and in India where prices have kept rising.

“We find that very low housing supply, stronger household balance sheets…and support from rebounding immigration are all contributing to the recent house price resiliency,” noted analysts at Goldman Sachs (NYSE:GS).
“Our relatively hawkish rates forecasts and the possibility that we haven’t seen the full impact of higher mortgage rates yet suggest that the risks to house price growth remain to the downside in most countries.”

Analysts across markets who answered an additional question were nearly split on purchasing affordability for first time buyers, with 45 saying it would worsen and 43 saying it would improve.

Adam Challis, executive director of research and strategy for EMEA at JLL, said strong wage gains over the past year had kept many housing markets resilient despite significantly higher borrowing costs.

“But at least for now, the proportion of housing markets that were going to or at least were expected to move significantly in negative territory just hasn’t played out,” he said. “And I think it’s unlikely that will be the case now.”

Peak-to-trough falls for nearly all housing markets surveyed were downgraded from the March poll.

However, with the high risk of recession in major economies this year, a slim majority of analysts, 43 out of 81, who answered a separate question said a significant downturn was more likely for home prices than a notable rebound.

Home prices in Canada and New Zealand were forecast to drop around 9% and 8%, respectively, for the year, the most among developed economies. In Germany, the expected drop was 5.5%.

British and U.S. house prices were expected to fall around 3% and Australia’s to be flat for the full year 2023. Average house prices are expected to rise about 6% in India.

House prices are already rising in some markets, complicating central banks’ efforts to bring overall inflation under control as rental costs can make up about a third of inflation baskets.

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

12 months ago

December 26, 2023

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.

The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.

Economy

China identifies second set of projects in $140 billion spending plan

Published

12 months ago

December 25, 2023

China identifies second set of projects in $140 billion spending plan

© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo

SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.

With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.

The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.

China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.

The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.

“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.

The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.

($1 = 7.1315 renminbi)

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

12 months ago

December 25, 2023

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.