Fitch Ratings recently released a new global housing market forecast, and the U.S. remains one of the top-performing markets in the world. As 2018 gets into full swing and sales numbers begin to accumulate, here are six important things to know about the market forecast for the coming year.
1. Prices Continue To Climb
Housing prices in the United States have risen steadily for a number of years, leading many to speculate that a downturn was imminent. However, the Fitch forecast, which examined 22 individual markets, projects the U.S. will see the sixth-best pricing growth over the next year. In 2017, the U.S. also held the sixth spot on the pricing list, experiencing gains of five percent across the nation. The latest forecast predicts that number will drop slightly in 2018, going down to 4.6 percent. Even with a dip in price escalation, analysts aren’t sounding the alarm for a housing bubble.
2. United States Assessment
The non-comparative U.S. analysis provided by Fitch comes with no surprises. “Nationally, U.S. price-to-income ratios are close to the 25-year average, but several cities in the West are overvalued,” the report explains. Affordability issues in California are no secret, while many regions across the country are seeing prices closer to the normal range.
Reports of this magnitude often fail to underscore local issues and trends, but the data collected and analyzed presents conclusions similar to many forecasts that pertain exclusively to the American housing market.
3. Ireland Tops the List
Like the U.S., Ireland is expected to see a reduction in pricing gains from 2017 to 2018. However, that drop will be from 12 to 10 percent, allowing the Irish to keep the top spot in the international housing market. The number two spot on the list is a four-way tie between Germany, Canada, Portugal and The Netherlands, yet those countries should only see five percent gains – half of what Ireland expects in the next year.
4. Norway Slumps
Norwegians are hoping this report isn’t entirely accurate, as indicators have Norway housing prices dropping by five percent this year. With Fitch predicting median gains of 3.5 percent for the 22 surveyed markets, Norway is on the wrong side of the trend and has earned the bottom spot on the Fitch rankings.
5. Notable Numbers
Aside from the United States and Ireland, the other top markets of 2017 belonged to Canada, The Netherlands, Mexico and Denmark. While the median price increase for surveyed regions was around four percent, these markets saw increases of 9.1, 7.5, 6 and 5.5 percent, respectively. On the other side of the spectrum was Greece, where the market saw a two percent drop from the year before.
6. Full Assessment
Even though these international markets have plenty of distinct variables to contend with, Fitch is able to offer words of wisdom/warning for all members of the global housing market: “We expect prices to stabilize or drop modestly in overheated markets in several cities in 2018, but if corrections are only limited after several years of very high growth, the risk of large price declines in future downturns remains.”
Overall, the outlook for the majority of housing markets is still sunny. Nevertheless, the prospect of significant decline is very real; in some cities, the upward trend is expected to reverse sooner than later.
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